Gas spike blamed on buying run

Chas Sisk, the Tennessean

When it comes to assigning blame for the recent spike in gasoline prices, Tennessee drivers might look no further than themselves.

An unusual run on filling stations last weekend appears to be one of the root causes behind the widespread gasoline shortages and high prices that consumers have seen this week, state and industry officials said Wednesday.

Filling stations sold four times more gasoline than on a normal weekend as Hurricane Ike made landfall in Texas, the Tennessee Emergency Management Agency said.

That, combined with damage done in Texas, has caused wholesale gasoline prices to soar, resulting in higher prices at the pump, up to an average of $4.13 a gallon in Nashville.

"It's like right before a storm when everybody rushes to the store to buy milk and bread," said Jeremy Heidt, a spokesman for TEMA, which has been monitoring the shortage. "There's no way the store has enough milk and bread for everyone who wants to buy it. They are planning their purchases based on what consumers typically do."

Parts of Tennessee have experienced some of the highest gasoline prices in the country since Hurricane Ike slammed into Texas near Galveston on Friday, and there have been big fluctuations even within the state of Tennessee from west to east.

In the Nashville area, the average price of regular unleaded gasoline hit a record $4.131 a gallon on Wednesday, according to AAA's Daily Fuel Gauge Report.

The price has climbed steadily since late last week, and it's 56 cents per gallon higher than a month ago for regular unleaded here.

Even at that price, gasoline is a bargain compared to Knoxville, where regular unleaded sells for $4.303 a gallon. And Knoxville prices have come down since they hit a record of $4.652 a gallon on Monday.

Memphis, meanwhile, has seen gasoline hold steady at about $3.84 a gallon.

State gets complaints

The disparity in prices has led many people to accuse gas station operators of price gouging.

The Tennessee Department of Commerce and Insurance has received more than 2,200 e-mails and phone calls from people concerned with price fluctuations, spokesman Christopher Garrett said.

State officials have not ruled out the possibility that at least some stores hiked the price unfairly.

"It really has been more of a fundamental, information-gathering process," Garrett said. "We'll pass the information to the attorney general's office, and they'll make a determination what steps to take. I don't think we're really prepared to make a determination."

The spikes are not unlike those that followed Hurricane Katrina three years ago, and the accusations of price gouging also echo the aftermath of that storm. But after a lengthy investigation, the Federal Trade Commission found little evidence that gas stations gouged customers after Katrina.

Most of the price increases were caused by market factors.

This time, a shortage appears to have begun as Ike approached the Gulf Coast, officials said.

As demand climbed in parts of the state, including Knoxville and Nashville, operators began raising prices to keep from running out of supplies.

Officials were uncertain why demand spiked before this storm more than before some past hurricanes.

Hurricane Ike has temporarily knocked out refineries along the Texas coast. These refineries are the main suppliers of finished gasoline to Middle and East Tennessee.

As of Wednesday morning, 12 refineries were still out of service, the U.S. Department of Energy said, as workers repaired storm damage and tried to restore power.

Memphis has been insulated from the shock because much of its gasoline comes from a different source than the Nashville area's supply.

The Capline pipeline, which runs north from St. James, La., far from the devastation caused by Hurricane Ike, delivers crude oil to a terminal in Collierville, a Memphis suburb. There it is turned into gasoline in the state's only refinery.

Little gas in pipeline

But 80 percent of the gasoline in Tennessee, including almost all that is sold in the Nashville area, is delivered to the state through the larger Colonial pipeline, which carries refined gasoline northeast from Texas to New Jersey.

The pipeline suffered little damage from Ike and is capable of carrying its full load of 100 million gallons of refined gasoline a day.

But there is little gasoline to put into the system, a pipeline spokesman and other industry officials said.

"To some extent, we have to blame ourselves, because on Friday everybody and his brother filled up every gas can and pan they could with gasoline, and the stations haven't been able to come back," said Mike Williams, executive director of the Tennessee Petroleum Council.