Saturday, August 20, 2005

gasoline shortages coming?

okay folks...i'm just going to connect the dots on a few things here.

  • In the past month on two different occasions i pulled into gas stations in urban areas and they were out of gas...yes, OUT OF GAS. this has not happened except on rare occassions in my driving lifetime. nobody has talked about a gasoline shortage for US consumers. yet.
  • Several airlines in the past few weeks in the southwest had a jet fuel shortage. an article about this is here: "Airports in San Diego, nearby Ontario, Phoenix, Reno, the Florida destinations of Orlando and Tampa, and several small cities admitted last week that they're scrambling to find jet fuel. Some of those airports this summer have come within hours of running out." it becomes more than a local problem because they re-route traffic to get fuel from other places in the emergency or have the fuel driven to the airport from other local airports, but then those places have a shortage...vis a vis. my concern here is three-fold: one, mounting evidence we need more refining capacity. second, that the system is so tightly coupled that there is no room for error in the supply chain (ramifications of just in time inventory control systems), third is an issue of safety, especially on international flights. if there is a shortage, to what extent will the airlines go to minimize cost/disruption? note the recent case where british airways had planes where the engines went out and they continued the flight. from (link removed to fix blog formatting issues), check out topstories and search for flight 268: "The decision not to return Flight 268 after the engine lost power raised concerns about a new European Union law which requires European carriers to reimburse passengers for substantial delays." how far will they go to maximize profit at the risk of public safety? (answer: as far as customers let them). my concern is not this particular instance, where they still had 3 out of 4 engines, its that the airline expressed a willingness to continue the flight at an increased risk to the point that merely having stronger headwinds also forced an early landing. what if those headwinds extended for a longer period of time?

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