Gas prices soar; shortages likely

NORTHWEST ALABAMA - Gas prices soared to more than $5 per gallon at some retailers Friday as motorists waited in long lines, fumed and sometimes fought.

Fear that Hurricane Ike, which was expected to make landfall overnight in Texas, would damage refineries in the Houston area led to the steep run-up in gasoline prices even as the wholesale price of oil fell, briefly dipping below $100 per barrel on the New York Mercantile Exchange.

"It's all about supply and demand," said Steve Ferreira, senior vice president of marketing for North Carolina-based The Pantry Inc., which operates Kangaroo Express convenience stores in the Shoals. "The refineries around Houston are closed. About 30 to 35 percent of the nation's refining capacity is located there. With those refineries shut down, the gasoline supply is greatly reduced. That's what's driving prices."

Fuel prices in the Shoals jumped from $3.54 per gallon for regular Thursday morning at some retailers to $3.99 before noon Friday.

At Pirates Corner in Greenhill and 72 Quick Stop in Killen, the price jumped to $5.35 per gallon. Rod Nesbitt, who owns both stores, said he had no choice but to raise prices after his fuel distributor raised the wholesale price to $5.32 per gallon Friday morning.

"There's nothing I can do about it," Nesbitt said. "People are calling up here accusing me of doing all sorts of bad things, but I'm not doing anything. I'm not even passing on the prices that I am paying. I'm actually losing money when somebody pays with a credit card because of the fees I have to pay the credit card company."

Mike Williamson, of Lawrence County, Tenn., was shocked by the prices at Pirate's Corner.

"This is the most I've ever paid for gas," Williamson said. "It's ridiculous."

Williamson said he stopped at the Greenhill store after finding long lines of motorists waiting to buy gas at stores in southern Tennessee.

The owner of a convenience store in Muscle Shoals that was charging $5.30 per gallon declined comment.

Clay Ingram, public relations director of AAA-Alabama, said $5-plus per gallon gasoline could become more common during the next two weeks throughout the state.

He said the shutdown of the refineries around Houston and oil wells in the Gulf of Mexico caused wholesale prices of gasoline to soar to near $5 per gallon Friday with higher prices possible next week.

Although the Houston refineries are not major suppliers for Alabama, their shutdown is reducing the amount of gas available to retailers throughout the Southeast. Fuel distributors who do not have long-term contracts with refineries - typically independents and non-name brand companies - have no choice but to pay the higher prices. As the companies that buy fuel on a day-to-day basis scramble to purchase what gasoline does flow from the Gulf Coast region, it creates a bidding war and prices soar.

Ingram expects regular gasoline at retailers served by refineries that have long-term contracts to hover around $4.25 per gallon until the refineries and oil rigs return to full production.

Local district attorney offices and the state attorney general's office were flooded with calls Friday from motorists complaining about the high prices.

Lauderdale County District Attorney Chris Connolly said he received numerous complaints about gas prices. "A lot of people are unhappy," he said.

The furor over gasoline prices became so intense, Gov. Bob Riley declared a state of emergency, which makes it a crime for retailers to charge excessive prices for gasoline and other necessities. In a prepared statement, Riley said he issued the declaration after the U.S. Department of Energy reported that energy shortages are likely in the wake of Hurricane Ike.

Ingram warned against panic buying in wake of the reports that energy shortages are possible.

"This is going to be a temporary thing and should only last a couple of weeks," he said. "People just need to remain calm. They need to conserve gasoline whenever possible, which will help hold prices down."

Police departments around the Shoals reported flared tempers at some stations where motorists attempted to cut into the lines of vehicles that sometimes stretched from the gas pumps to the street.

By nightfall Friday, the long lines had disappeared at gasoline retailers around the Shoals.

Some retailers ran out of gas before noon.

Rosie Martin, of Sheffield, shook her head in disbelief as she watched motorists scramble to buy gas at Quick Mart on Second Street in Sheffield.

"Oh my goodness," Martin said. "Everybody has panicked, and they're coming to get gas."

Some retailers, including Kangaroo Express, asked motorists to limit their purchases to 10 gallons.

Ferreira said the request was a proactive measure intended to help prevent fuel shortages during the coming week.

"It's strictly voluntary," Ferreira said. "The pumps do not shut off when a customer has pumped 10 gallons. We're just trying to be ahead of the game and prevent any of the supply problems we saw after Hurricanes Katrina and Rita."

Ferreira said even if the Houston refineries escape Hurricane Ike unscathed, it could be two weeks before gasoline supplies return to normal.

"It's going to take a while to get the refineries up and running again and to get the gas flowing through the pipelines again like it was before the shutdown," he said.

As he filled his pickup at Kangaroo Express in Sheffield on Friday, Bill Capps, of Florence, lamented the rising prices.

"This is ridiculous. I was living in Houston in the '80s when Hurricane Alicia hit, which was one of the worst ones to ever hit there, but gas prices didn't go up this much," he said.

As she filled her tank at Mapco on Darby Drive in Florence, Jennifer Cooper said the prices were rising so fast it was hard to keep track.

"This is the third car I've filled up this morning, and it's getting more expensive each time," she said.

"I just left Kangaroo and it was $3.65, went to get a friend's car and it was $3.79 before I got back. So, I came here."

Unleaded gasoline was selling for $3.71 per gallon when Cooper arrived, but the price went to $3.89 while she was standing in line.

"This is just crazy," said Cooper, a 20-year-old single mother. "This is Florence, not California. It shouldn't be this way here. Everyone is panicking, and I'm not, but I've got to have gas.

"I travel with my disabled son to Birmingham regularly and it takes all the money I have to put gas in the car to get there and back. I'm just trying to survive."

Barbara Darby was also getting gasoline at the Mapco station. She said waiting was frustrating, but she blamed herself for not filling up Thursday.

"Someone called work and told us the lines were forming and the prices were going up dramatically," she said. "I took off work for what I thought would be a few

minutes.

"I could have gone yesterday. I was under a quarter of a tank and figured I'd wait until today. I need gas in my car and in a gas can. I hope that doesn't make people mad."

Jack Epperson, of Florence, spent 40 minutes getting $40 worth of gas in his pickup. The pumps were slow because so many people at Mapco were getting unleaded gas.

"It kinda reminds you of the 1970s when we had the gas shortage," he said. "It really doesn't make me mad, it's just costing more money and time.

"My wife talked to a dealer and she was told this is because they were shutting down refineries to make repairs. Others say it's the hurricane. Either way, I think it's just an excuse."

Malcolm Broyles, of Killen, said he has never seen gasoline prices rise so rapidly before a hurricane even comes ashore. "I think this is just ridiculous," Broyles said.

A year ago, regular gas was selling for about $2.65 per gallon, according to a AAA Alabama report. Six months ago, the average price was $3.20 per gallon.

Thad Hampton, of Sheffield, said the huge run-up in gas prices is causing hardship for many Shoals residents.

"You can't tell your boss at work you need a raise because gas prices went up," he said. "You just have to do without something so you can pay for your gas."

Dennis Sherer can be reached at 740-5746 or dennis.sherer@TimesDaily.com.

Tom Smith can be reached at 740-5757 or tom.smith@TimesDaily.com.