East Coast Drivers Face Gas Shortages

Published: April 22, 2006

Scattered gasoline shortages and higher pump prices could make it a difficult week for East Coast drivers. Refineries and service stations are scrambling to change to ethanol-based fuel before the federal deadline on May 5 and the start of the summer driving season.

AAA officials said a few dozen gasoline stations between Virginia and New Jersey had closed in recent days as they converted from fuels mixed with methyl tertiary-butyl ether, or MTBE, to gasoline mixed with ethanol, which burns cleaner.

Experts expect sporadic supply disruptions to continue in coming days, probably accompanied by a widespread surge in prices.

The conversion problems developed as prices for crude oil on the spot market reached $75 for a 55-gallon barrel yesterday, and the national average gasoline price increased to $2.85 this month from $2.15 a month ago, said Catherine L. Rossi, a spokeswoman for AAA.

"Ethanol-based gasoline is more expensive, and the average price is already above $3 in Washington and New York," Ms. Rossi said. "By Memorial Day or even sooner, a lot of other areas are going to pass through that $3 benchmark, too."

Many regions, including New York and Connecticut, stopped using MTBE years ago and have not been affected by the disruptions. The rest of the Mid-Atlantic region and Texas, primarily Dallas and Houston, face the brunt of the problems because they are the last remaining users of MTBE gasoline.

A federal energy bill passed last year ended the requirement that motor fuel contain an oxygenate additive like MTBE. The aim was to reduce smog, principally in the winter, but the additive was found to contaminate ground water.

Some refineries said the federal requirement to an additive gave them legal immunity from liability suits related to MTBE contamination of water. The companies are hurrying to switch to ethanol because they fear that the protection will lapse after the law takes effect on May 6.

Although the transition has been anticipated the Energy Department prodded Congress to hold hearings last month to warn refineries and retailers to prepare for the change it has nonetheless caused problems. Transporting ethanol from the Midwest, where it is derived from corn, has proven to be a challenge. This month, 60 service stations near Dallas ran dry.

Each station converting from gasoline with MTBE also has to drain and clean its storage tanks before using fuel with ethanol, a process that can take two days.

The switch to ethanol is further complicated by its coincidence with the annual transition from winter-blend gasoline to summer blend, said Michael D. Ward, executive director of the Virginia Petroleum Council.

In Virginia, the disruptions are concentrated in Hampton Roads, Richmond and the Washington suburbs.

"As you clean out these tanks," Mr. Ward said, "you also have to get the ethanol in place where it is needed. So it's a delicate balance."

A spokesman for the Energy Department, Craig Stevens, said his agency had seen "very limited spot shortages," primarily on the East Coast, but believed that supply could meet current demand. Mr. Stevens encouraged consumers to notify the department or the offices of state attorneys general if a station appeared to be inflating prices.

"We expect all filling stations to be good actors in this," he said. "Any bad actors should be reported to the proper authorities."

Motorists' groups sought to assure drivers that the shortages were not being caused by a supply shortage.

"There's no need for panic buying or for people to hoard gasoline," said Geoff Sundstrom, a spokesman at AAA headquarters in Maryland. "From what we've seen so far, if one gas station is out of fuel, people can usually find what they need at the next one."

In Washington, staff members for the Republican leadership in Congress and the White House met on responding to increasing gasoline prices. As a result, Speaker J. Dennis Hastert and the Senate majority leader, Bill Frist, agreed to ask President Bush to urge the Federal Trade Commission and the Justice Department to be vigilant for price gouging and market speculation.

Ron Bonjean, spokesman for Mr. Hastert, said such a request would be delivered on Monday.

The House leaders also agreed to ask the Environmental Protection Agency to use its waiver authority to allow conventional fuels to be sold in regions where laws require cleaner fuels. In the face of certain protests from environmental groups, Mr. Bonjean said the change would be for "a very short term."

Michael Janofsky, Jad Mouawad and Nate Schweber contributed reporting for this article.