Insight: After Sandy, Big Oil's pumps fail motorists

Fri Nov 9, 2012 10:58am EST
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By Edward McAllister and David Sheppard

NEW YORK (Reuters) - As lines of fuming motorists snaked along the highways of New York and New Jersey last week in search of gasoline, a surprising trend emerged: those who rushed to stations bearing the names of the world's biggest and best known oil companies were the least likely to find fuel.

Three days after Sandy pummeled the Northeast, fewer than one-quarter of the service stations operating under the Exxon Mobil Corp., BP and Shell brands were selling gasoline, according to a Reuters analysis of industry data. The companies say the figures are higher, closer to half.

Meanwhile a handful of medium-sized regional chains like Hess Corp, Wawa Inc and Sunoco performed far better, with as many as three-quarters of their stations operating, using back-up generators to dispense fuel to motorists, homeowners and utility crews.

It came down to one critical factor: the outlets of the oil majors are franchised, while those of the regional chains are company-run and benefited from the full resources of their corporate parents.

In Sandy's wake, it quickly became clear that the vast power outages across the Northeast had exposed a largely unseen vulnerability in the fuel supply chain that left as much as three-quarters of the New York City area's 4,000-plus stations unable to dispense fuel from electric pumps.

The new Reuters analysis, based on data from leading retail intelligence firm OPIS, shows how hidden factors deepened the crisis.

Gas stations carrying the brands of the three big oil companies make up a third of the market in the New York City area, the data shows. Over the past decade they have been franchised out to individual operators who enjoy little support from the multibillion-dollar majors whose name they bear.

When Sandy hit, they were largely left stranded, with no easy means to hire the big generators needed to power fuel pumps. But at the regional chains, crisis teams swung into action, hiring dozens of units to get fuel flowing again.   Continued...

A "no gas" sign is seen in front of a vehicle that ran out of fuel in front of a gas station in Staten Island due to shortages following Hurricane Sandy, in New York in this November 2, 2012, file photo. REUTERS/Lucas Jackson/Files