A Little Help from My Friends - Gasoline Supply Chain in Northeast
- Published on November 4, 2012
- Written by Dr Tom Phelan
We have all heard the news that gasoline is in short supply along the east coast, especially in New York City, New Jersey and the shore of Connecticut. But why is gasoline selling at 19 cents lower per gallon in Upstate New York?
Refineries and distributors of petroleum products have a supply chain that demands they "move" product and accept new deliveries. With fewer sales along the east coast due to power outages, the supply on hand must go somewhere else. No one can purchase normal amounts of gasoline in the nation's most demanding market.
So, suppliers look for half-full tanks in outlets (gas stations) away from the coast. How far away, you ask. A FaceBook Friend yesterday told the story of driving from Poughkeepsie (75 miles north of NYC, up the Hudson River) to Red Hook (90 miles north of NYC) looking for a gas station that had gas. Yet, here in Central New York, gasoline has dropped from $4.04 per gallon to $3.85 per gallon. Why, because tanks in Central New York gas stations are taking the fuel that distributors can't sell along the coast. In order to make room for these deliveries, gas stations have lowered the price per gallon to sell more gasoline. The Federal Government kills two birds with one stone. They supply free fuel using military resources that are not electricity dependent, and they support the oil companies by purchasing the excess fuel the oil companies have no way to distribute.
A Little Help from My Friends, please. Is there a DRJ reader with more knowledge than I about how the supply chain is adjusted to avoid losses when disaster strikes. Are there folks away from the affected area benefitting from the hardships of those who are victims?
Meanwhile, I'm off to the pumps before the shortage reaches Central New York.
Please post you comments to help my thinking.