Is Oil refined and distributed in REAL TIME? WTF is up with shortages?

[KeepItReal]

Not 1 Oil Tanker from the Mid-East has been sunk in this "war".

This Hurricane hit on *Monday*.

Where are these "shortages" and price spikes coming from??

[TahitiNut]

1. Refineries shut down. Pipelines empty.

Most of the east is supplied from Nawlins. Spot market goes first, which screws the independents. People fill up. (Gulp!) Including their second cars. (Gulp!) And lawn mowers. (gulp) The "just in time" supply chain is pulled taut and (Sprong!) prices go up, up, and awayyyy.

[ewoden]

2. Gasoline distribution

Major pipeline- Colonial Pipeline out of LA (I did some hazardous waste work on it a while back), was out of commission for at leat 24 hours (no electricity). Supposedly it was to come back on line this evening but only at 30% capacity. This pipeline serves tgasoline, kerosene, aviation fule for many many terminals in Mid Atlantic and southeast. Distruption of that flow results in reduced storage buffer at distribution terminals. This slows truck deliveries to retailers....end resultless fequent deliveries. Couple that with increased demand, and panic buying and voila' empty retail outlets.

The puipeline supplies a variety of fuels, separted by massive air bullbes to separate products. FAA dictates priorities for aviation fuels. When distribution problems arise, the planes get fuel first.

[KeepItReal]

4. Thanks for the explanation. Welcome to D.U.

Wish it was under better circumstances

[clmbohdem]

5. Pipeline map...

This explains Georgia and the Carolina problems.

http://www.colpipe.com/ab_map.asp

[Speck Tater]

3. Actually,

Gas is pretty much refined in real time. It takes something like 3 days (if I recall correctly) from the time crude hits the refinery until it's being pumped into your car. Right now the pumps that deliver gasoline via pipeline to the southern states are without electricty. Thus no gasoline is moving, thus the station on the corner is not getting its daily deliveries. Thus, no gas.

It's not like there are big warehouses full of gasoline anywhere. Not considering the millions of barrels we consume every single day.

[craigolemiss]

6. Welcome to JIT delivery

As a business theory it really sucks---

http://en.wikipedia.org/wiki/Just_in_time

[davepc]

8. It was an invention of necessity by the Japanese

It works very well, but when there is a problem in the chain then things go very wrong, very bad, very quickly.

[karlrschneider]

10. Welcome to DU. Good link but I wish it had commented more on how

much the concept became so widely embraced. :D

[craigolemiss]

11. Standing inventory is taxed---no inventory--no tax

[leftofthedial]

7. preplanned gouging strategy

the immediate response to any "crisis" is preprogrammed into the entire distribution channel.

[karlrschneider]

9. I tend to liken it to a long line of traffic on the freeway...think about

how it goes...some minor perturbation creates an unusally large gap between 2 cars (we're doing just 1 lane at a time now)...like somebody suddenly slows down for whatever reason. The driver immediately behind the first guy uses up whatever reaction time he needs (or has) and slows, then the 2nd one back does the same thing and it all becomes like a spring that somebody squezzed and they all bunch up. Then the FIRST guy sees that he's falling behind so he "gives it the gas" to catch up and close the gap but it takes the -next- guy a couple seconds to see what's happening IMMEDIATELY IN FRONT of him so he does the same thing.

Much of this could be avoided if people would just LOOK A FEW CARS AHEAD and begin to accelerate when THOSE DO instead of waiting until the one immediately ahead does.

I know this is sort of a rambling analogy, but I think you can get it if you think about how it works...
:eyes: