boston.com Business your connection to The Boston Globe

Gas shortages tied to ethanol switch

Disruptions possible in the next few weeks

Gas prices are high, but not as high as this posting for regular yesterday on Dorchester's Morrissey Boulevard. Human error was to blame.
Gas prices are high, but not as high as this posting for regular yesterday on Dorchester's Morrissey Boulevard. Human error was to blame. (Globe Staff Photo / John Tlumacki)

Scattered gas stations from Virginia to New Jersey are facing temporary shortages as the industry grapples with a transition to more ethanol-blended fuel.

Analysts and industry officials said occasional shortages are possible for the next few weeks, though they emphasized that the problem has more to do with delivery schedules than a dearth of fuel.

The supply hiccups have occurred as refiners stop using the gasoline additive methyl tertiary-butyl ether, or MTBE, and instead replace it with ethanol, a more environmentally friendly fuel, which in the United States is mainly derived from corn. MTBE has been found to contaminate ground water and refiners are worried about costly lawsuits from municipalities.

''It pretty much caused the whole industry to stampede into the use of ethanol," said Geoff Sundstrom, a spokesman for AAA's national office.

Paul O'Connell, executive director of the New England Service Station & Automotive Repair Association, said he expects any problems to be temporary.

''There may be sporadic outages here and there, and there will be some speed bumps," he said.

Some suppliers of local gas stations have already made the switchover to gas with the ethanol additive, O'Connell said.

US Energy Secretary Samuel Bodman said yesterday that as US oil refiners phase out their use of MTBE, there may be supply and logistical disruptions that send pump prices higher. ''We are going to see some fits and starts," he said.

Bodman, departing today for the International Energy Forum meeting in Qatar, pinned soaring crude oil and gasoline prices on supply issues.

''There's no simple way to bring down high crude prices," he said, pointing out that the climb has been due to supply concerns stemming from global production disruptions and geopolitical tensions, as well as strong growth in global demand for oil.

Crude futures for June delivery on the New York Mercantile Exchange closed at just above $75 a barrel, a record high. Gasoline futures for May delivery closed at $2.24 a gallon.

''I wish there were a magic wand I could wave that would cause prices to decline," Bodman said. ''There isn't one. We're continuing to deal with the same issues we've been dealing with -- suppliers having a hard time keeping up with demand."

Fuel distributors say they are experiencing logistical challenges as terminal owners drain their tanks of MTBE-laced gasoline in preparation for the switch to ethanol blends.

As a result, some retailers have had to wait longer than usual for deliveries and pumps have run dry in the interim.

The Northeast -- with the exception of New York and Connecticut, which switched to ethanol last year -- and Texas are the two regions most affected by the switch because of their heavy use of MTBE-blended gasoline.

Particularly affected are Philadelphia, Baltimore, Washington, Richmond, and parts of Delaware and New Jersey, Sundstrom said. Parts of Texas had shortages two weeks ago. California switched to ethanol two years ago, while most other states aren't users.

Certain regions are required by federal law to use reformulated gasoline to cut down on pollution.

Another logistical complication with ethanol is that it cannot be shipped through pipelines because water molecules in the pipelines will stick to it, creating problems for vehicle engines. Instead it has to be transported by truck, rail, or barge from the Midwest.

The concern about mingling various fuel supplies is why terminal owners must scrub their tanks clean after draining them of MTBE-blended gasoline.

Last week, a terminal in Newark that disperses ethanol-blended gasoline had to replace its supply entirely after water seeped in.

Yesterday, the average nationwide price of gasoline was $2.86 a gallon, about 60 cents higher than it was at the start of the year.

Chris Reidy of the Globe staff contributed to this report.

SEARCH THE ARCHIVES
 
Today (free)
Yesterday (free)
Past 30 days
Last 12 months
 Advanced search / Historic Archives