Plains States Feel Supply Pinch After Refinery Flood

NEW YORK -(Dow Jones)- Fuel sellers north of Kansas are expecting to feel their supply pinched in the days ahead as the fallout from a flooded oil refinery reverberates throughout the regional market.

While the full effect of Coffeyville Resources LLC’s refinery shutdown has yet come to pass, some states have more to worry about than others. The Plains states have seen the plants they traditionally rely on for fuel suffer repeated breakdowns this year, depleting the region’s cushion of oil-product inventories. Officials in neighboring Oklahoma and Missouri, meanwhile, are more confident about getting gasoline and diesel.

On Tuesday the Petroleum Marketers & Convenience Store Association of Kansas became the latest state, joining South Dakota, North Dakota and Minnesota, to temporarily suspend some transport regulations that allow fuel tanker truck drivers to spend more time on the road securing supply for retail outlets.

The shutdown at Coffeyville is the latest in a spate of U.S. refinery disruptions that have borne down on the Midwest, sending gasoline prices there surging. Because the Midwest is landlocked, it can’t count on a flood of seaborne fuel imports to ease any supply crunch. Small- and medium-sized refineries are scattered over the region, and they largely supply their local markets, often with unique blends of motor fuel.

The Plains states have been particularly hard-hit by unanticipated problems and extended scheduled maintenance at nearby plants and other oil facilities, said Dawna Leitzke, head of South Dakota’s petroleum marketing association.

The state’s “hours of service” rule governing driver hours was waived for two weeks beginning June 15 and has just been renewed until July 19.

The Coffeyville outage is sure to tighten supply further, Leitzke said.

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