What caused the recent gasoline shortages in Mississippi? Katrina, of course.
After Hurricane Katrina, the Mississippi Attorney General’s office got numerous calls from people concerned about gas price gouging. But Jerry Wilkerson, executive director of the Mississippi Petroleum Marketers and Convenience Stores Association, said most of those cases were legitimate price increases from independent marketers.
Wilkerson said the major oil companies, to their credit, largely froze gas prices in the aftermath of Hurricane Katrina. Prices went higher for stores buying from independents because the gasoline shortage led to higher prices.
“Gasoline on the independent side went up 50¢ to 60¢ per gallon,” Wilkerson said. “The major oil companies made the determination early on to freeze prices where they were. They fluctuated to some degree, but didn’t go up like the independents. That is why you saw a wide margin on the streets. It wasn’t price gouging. It was just the unbranded gasoline was that much higher. That was the way it went.”
Supply and demand
Gasoline became in short supply after the August 29 hurricane because the oil rigs in the Gulf of Mexico and refineries were shut down. The Biloxi Munro Petroleum terminal was destroyed. And electricity went out over a major portion of the state. The power outage shut down the Colonial Pipeline, which supplies a large number of gas stations in the state.
At the same time, there was a greater demand for fuel because of the large numbers of crews clearing streets, electric workers restoring power, and convoys of relief trucks.
“MDOT (the Mississippi Department of Transportation) had to go in first and clear the roads so power trucks could get in to restore power, and it is unbelievable what a good job they did,” said Wilkerson, who had daily meetings with FEMA in the aftermath of the storm working to find gasoline for emergency response and relief vehicles. “The main reason for the gasoline shortages in the central part of the state was that power was off at the Colonial Pipeline facilities in Collins and Meridian. Large supplies of gasoline flow through these facilities. We convinced FEMA to put those on the top of the list to get power so we could start getting gasoline out to the public.”
At one point the shortage was so critical to disaster relief operations that Joe Spraggins, Harrison County emergency management director, issued a plea to corporate America to shut down for a day and send the gas they would have used to the Gulf Coast.
While losing power and the ability to pump fuel is expected in South Mississippi after a hurricane, the impact on the central part of the state with Hurricane Katrina was unprecedented. Even though there were some locations in the Jackson area that never lost power, their gasoline didn’t last long because of heavy demand.
The situation may have been compounded by gas hoarding. Wilkerson heard a story about one woman in an SUV who stayed in line for an hour just to get three gallons of gas. On the Coast people were filling every available container with fuel, sometimes for use to power electric generators.
Long lines, cash only
Right after the storm prices rose to about $3.30 at some locations on the Gulf Coast. There were long lines waiting to get fuel, especially when returning evacuees joined the thousands of rescue, relief and repair workers on the Coast. Waits as long as three hours were possible, with a one-hour wait being the average. Most stations took cash only.
It was about 12 days after the storm that the supply condition was resolved on the Coast, and the gas lines disappeared. But supply problems continued in the Delta and North Mississippi. Wilkerson said some of those areas had been supplied by gasoline coming in on barges, and Mississippi River traffic was disrupted by the hurricane.
The price increases following the hurricane have not been a boon to convenience store owners.
“We were already suffering profit- wise just from the increased cost of gasoline,” Wilkerson said. “When the price of gas is going up, we aren’t the ones making money. We are losing money. When this thing hit, a lot of stores had power, but no gas. They were selling other things. They had the same costs of running the business, but no gas sales. Then we had situations where stores who did have gasoline had to hire extra security to try to keep people from killing each other. Having to pay employees overtime was an increased cost.”
Some gasoline stations started pumping from stores even before the power came back on. Generators were used to pump the gas, and handheld battery operated calculators used to tally up the customer’s totals. Wilkerson said one lesson of the storm is that it might be helpful if one out of three gasoline stations have a backup generator for use in times of power outages.
Once stations reopened, it wasn’t necessarily the end of the story. Stores are on allocation. So if they sold out of gasoline, they might not have any more coming for a while.
“When the power came back on, stores that had product in the ground pumped it out,” Wilkerson said. “As soon as someone opened, in 10 minutes with people calling on cell phones there would be a line. The supplies would get sucked dry. We just couldn’t catch up. It was terrible.”
If store owners had to ship in gasoline from farther away than usual, they might have ended up taking a loss because of higher transportation costs. But they did it in order to have fuel to sell during an emergency.
“I applaud the entire industry for its response,” Wilkerson said. “They worked very hard to provide fuel. We met with FEMA people every morning to try to coordinate emergency fuel needs with commercial and general population fuel needs. It was amazing. The industry made sure emergency vehicles were taken care of.”
It was a time when some customers were less than polite. Owners reported that some customers would cuss them out over the cost of the gasoline, and then cuss them out over the $30 limit.
For the foreseeable future, fuel use is likely to be higher on the Coast as heavy equipment such as bulldozers, front end loaders and dump trucks work to clean up the mess.
“It is certainly going to affect the economy for probably years to come,” Wilkerson said. “But we will build it back. There is going to be an influx of income just from the construction. Mississippians are very diligent people. They will find a way, and get it done.”
Contact MBJ contributing writer Becky Gillette at email@example.com.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info