- The Washington Times - Friday, August 12, 2005

From combined dispatches

Lost luggage, bad weather and now no fuel?

Although fliers haven’t had to add that problem to the list of headaches associated with air travel, it might not be far away. Officials at Washington Dulles International Airport are working with airlines and Colonial Pipeline Co. to alleviate a jet-fuel bottleneck. Airports in Arizona, California, Florida and Nevada recently came within a few days, and at times within hours, of running out of jet fuel.

Airlines at Southwestern airports have been forced to fly in extra fuel from other markets and scramble for deliveries by truck. But these are expensive, short-term fixes that do not address what airline executives consider to be the underlying problem: With passenger traffic rising above pre-September 11 levels, the nation’s aviation business is outgrowing the infrastructure that fuels it.

What started as routine supply tightness in these markets quickly snowballed after disruptive events that included a hurricane, a canceled fuel shipment and, ironically, the airlines’ efforts to prevent shortages, several airline executives said.

Late July and early August were “unprecedented for Southwest for the number of cities where we’ve had to manage supply problems,” said Glenn Hipp, director of fuel purchasing and inventory management at Dallas-based Southwest Airlines. American, United and America West airlines also said they have experienced supply trouble.

These airlines have not canceled flights or made extra stops to tank up, nor have planes flown with less than the minimum fuel required by the Federal Aviation Administration, executives said.

The near-shortages underscore the added strain on refineries, pipelines and the airlines’ own fuel-procurement efforts as the industry recovers from its worst-ever downturn and energy demand rises throughout the economy. June passenger traffic was up 4 percent from 2001 levels, according to industry data.

“It’s really starting to surface as an issue,” said James Holland, vice president of logistics at Kinder Morgan Energy Partners LP, a Houston pipeline operator.

Part of the problem is that refining and pipeline capacity in some regions of the United States have grown more slowly than demand, meaning companies must run their equipment harder to satisfy growing fuel needs. This raises the chances of snags and leaves less of a cushion when something does go wrong.

Also, the petroleum industry has reduced its fuel inventories in recent decades, redirecting funds once spent on storage to more lucrative oil drilling. Thus, some of the burden of storing surplus fuel has shifted to the airlines. But the industry’s financial woes have hindered its ability, or willingness, to increase spending on storage, said John Armbrust, publisher of Jet Fuel Report, an industry newsletter.

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