Where the Heck is all of the Gas?

Almost two weeks after Hurricane Sandy rocked the Eastern seaboard, still only one-third of New York City’s gas stations have re-opened -- a cause of great ire and frustration for millions of New York City motorists.

So where the heck is all the gas?

Industry officials first blamed the fuel shortage on the gas stations themselves, many of which lost power behind the storm. However, power at the majority of these stations resumed quickly-- actually in a matter of a few days.

Then, the shortage was blamed on a slowdown in fuel deliveries from neighboring Connecticut and New Jersey due to closed tunnels and bridges. But, by Monday, the majority of New York City's bridges and tunnels had re-opened.

Still and yet, the gas shortage and long gas lines persist around the city. In fact, the situation has grown dire enough to compel Bloomberg on Thursday to announce that New York City will begin rationing its fuel reserves through an odd-even license plate system for gasoline purchases. 

So, again, what’s the problem? Where is the fuel?

Well, according to gas industry officials, the problem is multi-layered, with the greatest challenge being repairing the badly damaged gas supply terminals in New Jersey and other states affected by the storm. A large number of the supply terminals are either shuttered or operating at reduced capacity, reported the Star Tribune.

Also, according to Tom Kloza, chief oil analyst at the Oil Price Information Service, the densely populated New York-New Jersey area has fewer stations per capita than any other major metropolitan area, making the shortage an even bigger problem.

However, according to Gregg Laskoski, a senior petroleum analyst for GasBuddy.com, the hurricane is not to blame entirely for the gas shortages across the city. Laskoski told CFO.com that a shortage of refineries on the East Coast also is a contributing factor.

In fact, even before Hurricane Sandy, gasoline supply was tight in the Northeast, he said, with New York refineries operating at only 81 percent of capacity.

Following Hurricane Sandy, the Hess refineries at five New Jersey terminals, for example, were flooded and lost power. Although two of the terminals resumed operations on Wednesday, the company’s Bayonne and Newark terminals remained closed with no timeline for reopening.

And to complicate matters even more, added Laskoski, although the East Coast uses a good portion of the gasoline produced in this country, most of the nation’s oil refineries are on the Gulf Coast.

“The problem we see in the Northeast emphasizes the importance of having more refining capacity in other parts of the country besides the Gulf Coast,” which is extremely vulnerable to hurricanes, he said.