North Dakota: Officials say fuel supplies OK for summer

BISMARCK, N.D.—Fuel -- albeit costly -- should be in sufficient supply this summer in North Dakota, industry officials say.

Fuel shortages last summer forced North Dakotans to pay among the highest prices in the nation for gasoline and diesel. Energy officials said as many as eight nationwide refinery outages -- caused by fires, floods, repairs and maintenance -- combined with a record harvest for some crops to pinch fuel supplies in North Dakota and elsewhere.

"Certainly, last year was a perfect storm for all fuel products," said Ron Ness, president of the North Dakota Petroleum Council. "There were supply disruptions, and what resulted was that it was tough to find product."

It should be easier this year, he said.

"There is more refinery capacity now in the region," Ness said. "Barring any unforeseen situation, there should be more supply."

Magellan Midstream Partners LP, which runs a network of pipelines and distribution terminals, said a lightning strike at one refinery and maintenance at other refineries disrupted the supply last year. Magellan's North Dakota terminals are in West Fargo and Grand Forks.

Magellan spokesman Bruce Heine said supplies did not match the demand last year and the company worked with shippers to set priorities.

"We're not envisioning that type of a problem this year," he said.

That's good news to Woody Wuitschick, who runs a service station in Harvey, a town of about 2,000 people in central North Dakota. He said his station's 1,500-gallon fuel tank nearly ran dry at least twice last summer.

"So far, I haven't had any problems with supply this year," Wuitschick said Tuesday. "But I did have to raise my prices a dime today to $3.67, the highest price ever."

Tight supplies last year in North Dakota drove Gov. John Hoeven to grant several extensions of the 15-hour work day for commercial truckers hauling fuel. The federal Environmental Protection Agency agreed to allow North Dakota fuel dealers to import Canadian gasoline earlier than usual, at Hoeven's request.

Hoeven said recently completed and planned expansion projects in Montana, Minnesota, South Dakota and at Tesoro Corp.'s refinery at Mandan -- the state's sole oil refinery -- will help curb fuel supply problems. Refinery projects also are being explored in North Dakota, including one in Williston and on the Fort Berthold reservation.

"In the long term, we need to look at building supply," Hoeven said. "In the short term, we need regulation in the market to keep speculation from driving up the price of crude."

The supply crunch and the resulting high fuel prices last year also prompted Sen. Byron Dorgan, D-N.D., to call on the federal Energy Department to monitor oil refinery outages and watch for a potential disruption of supplies. The agency agreed to do so because antitrust laws forbid companies to share information on planned refinery shutdowns with each other.

"Last year was an aberration, given all the outages, but the outlook at this point is promising," said Mike Rud, president of the North Dakota Petroleum Marketers Association. "Obviously there could be an emergency of some sort that could throw a monkey wrench."

North Dakota motorists on Tuesday were paying an average of $3.59 a gallon for gasoline, compared with the national average of $3.61, said Gene LaDoucer, a AAA spokesman. The average diesel fuel price in North Dakota was about $4.23 per gallon, equal to the national average, the automobile club said.

For a time last year, North Dakota and Hawaii had the highest fuel prices in the nation.

Industry and state officials say North Dakota uses about 24,000 barrels of gasoline daily and about 18,000 barrels of diesel. Each barrel is 42 gallons.

LaDoucer said there should be plenty of fuel available this summer in North Dakota -- at a price. His group is predicting gas prices to reach $3.75 in the state this year.

"The issue the country is still struggling with is refinery capacity," LaDoucer said. "The lack of refining capacity, in general, affects the entire country."

The newest refinery in the United States was built in 1976, when there were about 300 such facilities. Now there are about 150 refineries in the U.S., he said.

Rud, of the North Dakota Petroleum Marketers Association, said refining capacity is needed but building refineries is expensive, and the environmental hurdles are big, with an onerous permitting process that can take a decade.

"We, as a society, have to make some tough decisions on what we want and what we're willing to give up to make it happen," he said.