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Gas Prices Spike Over Labor Day

Gas Prices Spike Over Labor Day

The following article was written by National Association of Convenience Stores (NACS).

Hurricane Harvey took one quarter of the oil refineries in the United States offline and reduced product flow in the Colonial Pipeline. Due to reduced supply, as of September 4 the U.S. average for regular gasoline is now as its highest price of the year, according to AAA, at $2.638 per gallon—the first time since August 2015 that average national gas prices have exceeded $2.50 a gallon.

Amid higher prices at the pump and uncertainty, the message to consumers is not to change their fuel purchasing behavior.

Emily LeRoy, executive director of the Tennessee Fuel and Convenience Store Association, told the Times Free Press that consumers “should go about their normal business. There's still plenty of stations open with fuel. …There may be some rolling spot outages, [but] they're temporary."

LeRoy added that the smaller Plantation Pipeline that flows from Baton Rouge to Washington, D.C., with a spur through Chattanooga, is running full tilt. And tanker trucks are picking up gasoline supplies at other refineries, including those in Kentucky and Indiana.

AAA Tennessee spokeswoman Stephanie Milani told the news source that the U.S. Department of Energy released 500,000 barrels of oil from the U.S. Strategic Petroleum Reserve, and the Environmental Protection Agency has issued fuels waivers to allow the sale of winter-blend gasoline in Tennessee, Georgia, Alabama and nine other states.

"[It’s] not time to panic," Milani told the news source. "There's plenty of gasoline in the United States…If there are outages, they are going to be the exception rather than the rule. …More than likely, motorists are going to be able to drive to the very next gas station and fill up there."

NACS spokesman Jeff Lenard told the news source that retailers who have experienced fuel supply shortages can purchase gas on the spot market, although unbranded operators may be at a disadvantage when supplies are tight, compared to branded operators that typically have supply contracts.

News of gas shortages elsewhere, for example in Dallas, has led people to form long lines to top off their tanks. "Rather than having a shortage causing gas lines, you have gas lines causing shortages," Lenard told the news source. "Social media has a lot to do with it."

The Texas Food and Fuel Association (TFFA) says that last week, the region experienced 10 times the normal amount of drivers who rushed to their local gas station to fill up every car and gas can in sight—all within a span of 36 to 48 hours. The “panic buying” frenzy placed an incredible strain on the state’s fuel distribution system and threw the demand-to-supply ratio completely off balance. As a result, the TFFA and industry partners have made every attempt to calm the motoring public through a series of news articles, emails, off/on-camera interviews, social media campaigns and personal outreach.

“The fuel distribution system has been disrupted by Harvey. Limited access to product due to flooding, long lines at terminals, equipment and infrastructure damage, roadway closures, utility outages, workforce challenges and fuel ‘panic buying’ have all attributed to the current strain on the fuel distribution system,” says the TFFA. “The men and women of the oil and gas industry are working around the clock to stabilize the fuel supply chain and reduce the inconvenience drivers in Texas are experiencing at the pump.”

While it remains unclear how long it will take for fuel production to resume and reach full capacity, one thing is clear: As refineries come back online, it will take time for them to resume operations. And as they begin to produce supply, it has to move through the pipeline, which carries different batches of fuel like diesel and jet fuel. (Read more How Refineries and Pipelines Resume Operations.)

For more information and at resources on hurricanes, and specifically Hurricane Harvey, visit convenience.org/hurricane. Stay tuned for additional insights as Hurricane Irma continues its path this week.

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