Some Carriers Forced To Fly In Fuel To Keep From Running Dry

Forget record crude oil prices topping $64 a barrel. Forget hedging. For now, just keep the tanks full.

Supply crunches in Florida, Nevada California and Arizona have left some carriers within days -- or even hours -- of running out of jet fuel. So far, no flights have been delayed or canceled because of the shortfall, but carriers have been forced to truck in or even fly in additional fuel to meet their needs.

The problems appear to be geographically-oriented. The hardest-hit areas have suffered from pipeline problems, hurricanes and underproduction at refineries. The net result, according to Southwest Airline's director for fuel purchasing is "unprecedented for Southwest for the number of cities where we've had to manage supply problems." Glenn Hipp was quoted by the Associated Press.

"It's really starting to surface as an issue," James Holland, vice president of logistics at Kinder Morgan Energy Partners, told the AP. Holland's company operates pipelines.

While passenger traffic is now growing beyond pre-9/11 peaks, capacity at both refineries and pipelines hasn't kept up. More than any shortage of crude oil, the lack of sufficient refinery capabilities has driven up the price of crude oil.

"If more effort isn't put into resolving some of these issues, it could have serious impact on the operational integrity of the whole aviation system," warned Bob Sturtz, general manager of fuel at United Airlines, in a statement to the AP.

FMI: www.eia.doe.gov/oil_gas/petroleum/info_glance/jetfuel.html