Lobbyist Decries Calls for Gas Stations to Have Generators
Despite the miles-long lines at gas stations in the greater New York area following superstorm Sandy, an industry lobbyist slammed the idea that fueling stations should be required to have a generator on site.
Adding a generator could cost service stations up to $40,000 to run a pump, complained John Eichberger, who as vice president of the National Association of Convenience Stores, represents roughly 80 percent of the U.S.'s retail gas stations.
"It's expensive," Eichberger said. "That's a big investment when you don't know how often you need it. You might not need it again for another 15 to 20 years, so we need to be very cautious about how we go about mandating things."
Four days after Sandy savaged the Northeast, many stations remained closed because of a lack of fuel, a lack of power to pump it or both. Speaking on CNBC's "Fast Money Halftime Report," Eichberger said some stations will immediately be able to start pumping gas when the power returns, though.
(Read More: Long Lines, Rising Tempers.)
"Provided they have gas in the ground and provided they have no other damage from the storm, they should be able to start pumping immediately. The challenge becomes we had a run on fuel supplies before the storm hit," Eichberger said, adding some fueling station owners reported up to a 200 percent increase in fuel sales in the days before Sandy made landfall. "Those stations that have not been able to resupply, once they get power, they are likely going to have lower than normal inventories. It takes a while to get inventory back to those stores."
Asked by CNBC's Scott Wapner why service stations didn't anticipate motorists would make a run on fueling supplies prior to Sandy's landfall and better prepare, Eichberger said fueling stations only have so much storage capacity.
"Even if a station had maximized their storage inventories, a run on inventories would have dropped them down and made it a little more difficult to refill those supplies," Eichberger argued.
(Read More: Why Is There No Gasoline in the Northeast?)
On the supply side, Eichberger said news that the U.S. government waived a rule called the Jones Act that bars foreign tankers from transiting U.S. ports, potentially easing supplies from the Gulf Coast could be "very significant," but only if power is returned to two major New Jersey refineries and key oil storage sites.
"It could be very significant, but I think … until we get power to those terminals, it's not going to do a whole lot for the local retail establishments," Eichberger said. "It really comes down to if we have power, we can start moving the product to retail. We can start providing some relief to the customers."
(Read More: Gas Shortages May Not End for a Week.)
Despite the power outages, lack of fuel and those long lines at gas stations, Eichberger said gas station operators are doing everything possible to get power and fuel. Some stations are even sending across state lines to get gas, he said. Even so, Eichberger declined to call the gas shortage a "crisis."
"Whenever you have prolonged periods of power outages, you start running into a situation where people can label the situation, but the fact of the matter is, once the electric companies are able to restore power, things are going to start slowly returning to normal," Eichberger said. "Unfortunately in these situations, patience is key and patience is very hard to come by."
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CNBC.com with wires.