Some regions could see gas shortages this summer

| Thursday, February 23, 2006

Consumers in Texas and along the East Coast could be facing higher gasoline prices and supply disruptions this summer. That’s gas, not diesel.

An informal survey conducted by the U.S. Energy Information Administration found that many refiners producing reformulated gas in those areas are planning to switch to ethanol-based blends before the 2006 summer driving season.

The reason for the switch, according to the report, is that more states are banning existing additives, such as MTBE, because of concerns about potential water pollution.

The bans are indeed addressing those concerns, but have raised others, including the possibility of gasoline supply disruptions and price spikes in areas that use reformulated gasoline.

A report issued by the EIA on Wednesday, Feb. 22, said that refiners along the East Coast and in Texas are already switching to ethanol blends at such a rapid rate that the supplies of ethanol may not be able to keep up.

As such, gas stations in those areas could see supply disruptions and price spikes until the market and supplies make their adjustments.

The report said that the East Coast and Texas will be hardest hit because other areas that use reformulated gasoline – including California and the Midwest – have already made the switch, so the other regions will be behind them in line when it comes to supplies.

The report said that the supplies are likely to get tighter as the summer driving season goes on and demand will not likely slow until the fall.

Comments