Regular readers know that I often lambaste the fuel price alarmists, particularly those who cheerlead each gasoline rally, and talk of $4.00 gal averages as a certainty. This is not a flip/flop, but today is the first day of hurricane season, and I’m going to sound a warning about how vulnerable U.S. supply is this summer.

  First of all, let me stress that the odds are with us, even though most of the weather forecasters predict a more active storm season than normal. You can check out the actual probabilities at a web site set up by the hurricane forecast team at Colorado State at www.e-transit.org/hurricane  You may conclude as I did that even in refinery clustered cities like Corpus Christi and Pt. Arthur, Texas, major storms have a better chance of missing, rather than making landfall, near refineries.

   But an actual direct strike by a major storm in the arc from Corpus Christi east to Pascagoula, Mississippi could be catastrophic for fuel prices. Simply put, hurricane season 2007 begins with the lowest amount of gasoline per capita in the modern era.

   New England and the Southeast, both regions that could suffer a direct hit in this year's hurricane season, have some of the lowest inventories in the U.S. Just how thin is the supply cushion? About 11 gallons per person is all that is available, according to an analysis of inventory data by Oil Price Information Service.

   Think of it this way. The gasoline market in July, August, and early September will be incredibly combustible. It could take a major storm to light the fuse, but there’s no question that knocking out even one or two refineries would lead to a late Summer pricing explosion.

   The next 30 days represent our best chance to create a safety net for these coastal gasoline supplies. Once we’re into July and August, it will be too late.

   There really hasn’t been a safety net since the early 90’s. Just-in-time inventory practices have been implemented in most U.S. businesses, and the petroleum business is no exception. On this day in 1981, for example, we had about 260-million barrels of gasoline in U.S. bulk storage. Gasoline demand was under 7-million bbl per day, so the fuel represented nearly 40 days worth of supply.

  Nationwide inventories moved up 1.3-million barrels this week, but that represents about three and one half hours of U.S. gasoline demand.

  Let’s look at where tanks are relative to 25 years ago. In late May 1982, there was 214.2-million barrels of gasoline in primary storage and gas demand was 6.75-million barrels per day. That represented 31.7 days of supply.

   Last year at this time, supply numbers were a less-than-comfortable 22.7 days, down nine days from numbers commonly seen during the Reagan years.

   This year, the numbers are even worse. Inventory figures that I looked at on Wednesday (before we got the 3 ½ extra hours worth of fuel) stood at 196.7-million barrel, or less than 21 days’ supply. That’s based on demand that has consistently been around 9.4-million b/d recently.

   But just as gasoline prices can vary dramatically through regions - as much as 60cts/gal separates average pump prices in some states - there is a great spread in storage numbers.

   Recent and historical inventory numbers, when compared against contemporary population data, show a huge difference in risk levels between, say, the Midwest, where prices are currently at all-time highs, and the Southeast, where they are not.

   Dept. of Energy data show gasoline storage for each of the five PADDs (Petroleum Allocation Defense Districts) and breaks the East Coast up into New England, Central Atlantic, and Lower Atlantic states. While it is not possible to glean individual state numbers, it is reasonable to estimate which regions have the most fuel and which ones are perhaps at the greatest risk if supply lines are disrupted.

   When inventories are compared against per capita populations, here's what it looks like:

Gasoline Per Capita Figures in Gallons

Region              25 Yrs Ago   Last Year   Current

National             38.47 gal      29.23 gal   27.55 gal

East Coast         29.82 gal      21.04 gal   19.70 gal

New England     18.90 gal      14.99 gal   11.17 gal

MidAtlantic       28.85 gal      26.50 gal   25.19 gal

Lower Atlantic   35.20 gal      17.60 gal   16.93 gal

Midwest             33.52 gal      26.54 gal   23.65 gal

Gulf Coast          86.10 gal      69.72 gal   66.78 gal

Rockies              49.56 gal       22.60 gal   22.97 gal

West Coast        27.30 gal       21.82 gal   21.13 gal

Note: Inventories in the second and third column both use 2006 population

estimates, so that actual current gallons per capita data is quite likely

lower than numbers in the current column.

   Some conclusions can be drawn from the chart as well as other statistics on hand. A few examples:

    - -West Coast gasoline inventories are about 4.23 million barrels higher than they were in 1982, but the population of those states (AK, AZ, CA, HI, NV, OR, WA) has increased by about 19.5 million in 25 years. Even so, at 21.13 gallons per person, the region isn't as compromised as some other parts of the country.

   - -The Midwest has not seen the population explosions of Sun Belt states, with 15 states in the heartland accounting for about 9.7 million more people since 1982. But Midwestern gasoline stocks are still low by historical standards - currently 46.1 million barrels, compared with 50.6 million barrels last year and 56.1 million barrels 25 years ago. However, the Mid-Continent is also the region that should see the biggest increase in production over the next 30 days, so the gallons-per-person number of 23.65 gallons isn't that daunting.

   --New England has kept its population in check, with about 14.3 million people compared with a count of 12.5 million in 1982. However, it is a region that sees precious little gasoline in bulk storage. In 1982, gasoline stocks stood at 5.7 million barrels but last week, that number stood at just 3.8 million barrels. When compared to the population, there are just over 11 gallons per person. That is one reason why bad weather conditions, delaying barge and cargo movement, can cause such supply dislocations.

  - -The lower Atlantic has seen a dramatic rise in population, with coastal states from Florida to Virginia and West Virginia seeing a 25-year population increase of about 16.8 million. However, bulk storage of gasoline in this region is considerably lower than it has been in the modern era, at barely 20 million barrels. That translates to fewer than 17 gallons per person in an area with longer and longer commutes.

   Not everything about the 25-year statistical analysis is troubling, however. U.S. refinery output of 9.2 million barrels per day tops the 1982 number by 2.9 million barrels/day, so there is the capability of moving plenty of product downstream even when the trade talks about the event-stricken refining business. Gasoline imports are also very different from 1982, when only about 145,000 barrels per day of offshore gasoline came into U.S. ports. Most recent import levels have been just shy of 1.3 million barrels per day.

   Still, this is a shallow shallow inventory for the beginning of hurricane season. Just-in-time may mean just intolerable if it’s an unlucky year.