The Times-Picayune: A BAD CASE OF GAS

The Times-Picayune: A BAD CASE OF GAS

By Keith Darcé and Stewart Yerton

Business writers

Sunday, June 13, 2004

New Orleans area drivers aren’t the only ones dealing with faulty fuel gauges caused by sulfur in gasoline. Similarly tainted fuel has been reported in at least four other states and in Canada.

Joyce Williams was driving home from work late on the afternoon of May 25 when her Chevrolet pickup truck stalled near the peak of the High Rise bridge over the Industrial Canal in New Orleans.

Williams coasted down the bridge and took the first exit off the highway. Even though Williams’ gas gauge indicated she had more than a quarter of a tank left, she was out of gas.

Days later, Williams learned the cause of her problem: gasoline containing high levels of elemental sulfur, which was refined in Louisiana and widely sold in the New Orleans area, as well as Tampa and Port Everglades, Fla.

Although Williams appears to have learned what broke her fuel gauge, the mystery of the tainted gas has confounded gasoline industry executives, public officials and automotive experts in New Orleans and several other locales where similar gas appears to have been sold.

In recent weeks more than 45,000 drivers scattered across at least five states have reported car problems that have been linked to bad fuel, which contains unusual amounts of a type of sulfur not normally found in gasoline. As if sky-high gasoline prices aren’t enough, summer drivers, it appears, now have something else to worry about: Weird gasoline that can lead them to run out of gas on the highway.

The situation is causing headaches for gasoline companies and automakers. The bad gasoline refined in the New Orleans area has spawned a $100 million class-action suit in Florida and at least three suits in Louisiana.

Automobile consumer advocates are calling for federal oversight into the issue. Repairs alone, which are being paid for by Shell Oil Co., whose refining arm made the gasoline, and ChevronTexaco Corp. could run into tens of millions of dollars.

In a chilling development in New Orleans, police are investigating whether the bad gas was linked to a dramatic Memorial Day accident in which an Oldsmobile Alero stalled on the High Rise, was rear-ended by a truck, and plunged 100 feet into the Industrial Canal, killing 35-year-old Gregory Alix. The investigation is ongoing.

“That was a consideration the day of the accident, even before the vehicle was recovered,” said New Orleans Police Lt. Henry Dean, who is heading the investigation. “It was mentioned by a couple of the investigators at the accident scene.”

Not the first time

The problem gasoline in New Orleans has been traced to Motiva Enterprises’ refinery in Norco, which is owned by Shell and Saudi Aramco. Shell has confirmed the gasoline contained elemental sulfur, a rare form of sulfur, which seems to corrode silver gasoline gauge sensors used by some auto makers. The gas was distributed to nearly 250 local stations, which sold fuel under the Shell, Texaco, Chevron, Exxon and Citgo brands. Exactly how the sulfur got into the gas isn’t clear. What is clear is that the same thing has happened recently in other places.

Marathon Ashland Petroleum LLC, for example, blamed elemental sulfur for a rash of broken gas gauges in Louisville, Ky., in May. United Refining Co. in Warren, Pa., also has confirmed that it has sold gas containing elemental sulfur in northwestern Pennsylvania and in New York state, and the company has agreed to pay claims from motorists who say the fuel caused their gas gauges to go haywire.

Last summer, motorists in the Toronto area experienced fuel gauge problems after Petro-Canada of Calgary and other companies distributed gas containing elemental sulfur. In more recent weeks, hundreds of motorists in the St. Louis area have had to replace fuel injectors gummed up by bad gas.

Executives with the gasoline companies say their chemists and petroleum engineers are stumped. Although there are plenty of theories, no one really knows what happened.

Whatever the cause, public officials are taking steps to make sure wronged consumers are protected and that the problem doesn’t happen again.

Louisiana Attorney General Charles Foti Jr. has been in talks with Shell to make sure the company responds to the Louisiana customers, said Kris Wartelle, a spokeswoman for Foti. So far, Wartelle said, the company has done virtually everything Foti has asked.

In Florida, where the Motiva gasoline was shipped to Tampa and Port Everglades just in time for the Memorial Day holiday, officials have imposed an emergency rule to prevent gasoline with elemental sulfur levels from being sold in the state. The rule, imposed by Charles Bronson, commissioner of the Florida Department of Agriculture and Consumer Services, requires refiners to test gasoline sold in Florida for elemental sulfur.

Bronson also is trying to figure out “how in the heck this could have happened in the first place,” said Terry McElroy, a spokesman for the agency.

“Some people are blaming the gas companies; some people are blaming the auto companies,” McElroy said. “We’ve written to both groups to find out how this could happen.”

Louisiana is taking a different approach. Bob Odom, commissioner of the Louisiana Department of Agriculture and Forestry, said his agency has ordered kits to test the gasoline for elemental sulfur and that his agents will take samples of gasoline and perform the tests themselves.

Although Louisiana taxpayers, rather than the companies, will have to pay the bill for the tests, Odom said his method is preferable to Florida’s in part because Louisiana will be able to conduct the tests more quickly.

“In my opinion, we will get to it quicker ourselves,” Odom said.

It will be about three weeks before the state receives the kits, he said. Agents were to begin taking samples last week.

“We’ll have enough samples where we’ll have 50 to 60 to test,” he said.

So far, the gasoline industry as a whole hasn’t developed any policy to regulate itself.

“We really don’t have a role in this at this point,” said Bill Bush, a spokesman for the American Petroleum Institute in Washington, D.C., a trade association representing the oil and gas industry.

Even though the bad gas has tarnished the images of the nation’s leading retail brands — including Exxon, Shell, Chevron, Texaco and Citgo — Bush said the industry hasn’t seen fit to get the institute involved.

“We serve them,” he said. “They tell us what’s important to them.”

But advocates for automobile owners say the sheer number of people affected alone should make the issue important to the gasoline industry.

“The industry just had a wake-up call,” said Mike Right, regional vice president of affairs for AAA, the well-known motorists’ club. “If they didn’t, then I don’t know what it will take to wake them up,” he said.

Observers inside and outside of the refining companies have asked whether the problems might have something to do with new refining processes. The outbreaks have come at a time when most refineries are running at peak capacity to keep up with surging fuel demands from American consumers. At the same time, environmental regulations are forcing oil companies in the United States to produce an increasingly complex variety of fuels to meet pollution standards that differ from region to region.

“We are concerned whether oil companies have lost control of their refineries,” said Don Redman, spokesman for AAA in New Orleans. “Are they in such a rush to meet demand that something is slipping by? The petroleum industry needs to sit down and decipher what is going on,” he said.

That doesn’t mean consumers should worry about the nation’s gasoline supply, said AAA’s Right, who is based in St. Louis.

“I don’t think people need to fear going out and purchasing gasoline,” he said. “I bought gas today, and I wasn’t a bit concerned.”

One of the less baffling elements of the mystery is that the gasoline only affects cars with silver-tipped gas gauge sensors. The bad news is that these sensors have been the part of choice for General Motors Corp., the U.S. auto giant. Although GM denies its cars are the only ones vulnerable to the problems, data collected by The Times-Picayune and United Refining indicate that, when it comes to the gasoline, it’s safe to say, “Detroit, we have a problem.”

Among the 48 people who contacted The Times-Picayune in recent weeks about gas gauge problems, 36 of them, or 75 percent, drive General Motors vehicles. That mirrors the pattern United Refining has seen, said Larry Loughlin, a vice president with the Pennsylvania company. About 78 percent of those who reported gauge problems to the company drove GM vehicles, he said.

GM vehicles include Chevrolet and Oldsmobile models, such as the ones driven by Williams and Alix, the New Orleans residents whose vehicles stalled recently on the High Rise bridge.

GM spokeswoman Brenda Rios confirmed last week that the company has been installing fuel gauge sender units with sulfur-sensitive silver components since the early 1990s. The sender units, so named because they send the information about the level of gasoline in the fuel tank to the dashboard gas gauge, are submerged in gasoline, much like toilet flush valves are submerged in water. Rios said other car manufacturers use the same types of units, and she denied that the recent outbreaks of fuel gauge problems are somehow the fault of GM.

“We don’t have any data that says that sort of thing,” she said.

The problem, she said, isn’t with the gauge sender units in cars, but rather with the fuel containing elemental sulfur.

“The sulfur shouldn’t be in the fuel,” she said. “That’s where this issue is coming from. We have been using the same basic technology since the early 1990s, and this only has more recently become an issue.”

General Motors hasn’t recalled silver-component units in older models or recommended that car owners change them out themselves.

Nonetheless, General Motors decided recently to begin replacing the old sender units with new ones containing different metal components in new vehicles. The change is being done in phases, Rios said, and all models should be equipped with the new units by 2006..

“We always try to improve our vehicles,” Rios said. “We hope (the new sender units) will be less susceptible to corrosion from fuels that have elevated levels of elemental sulfur.”

Damage from the tainted gas thus far appears to have been limited to fuel gauge systems.

Although high levels of sulfur in fuel can damage engines and catalytic converter exhaust systems, the sulfur that appeared in the recent batch of Shell/Motiva fuel was well within federal limits for acceptable sulfur volumes, Shell spokesman Shawn Frederick said. Shell has said the gas isn’t known to cause engine damage.

The problem with the Motiva gasoline is not that it contains unusually high levels of just any kind of sulfur; sulfur typically appears is gasoline as a compound with other substances. The problem is that the gas contains a form of the substance called elemental sulfur: a pure form that typically doesn’t appear in gas. Because of this, manufacturers in the past haven’t tested their products for elemental sulfur.

Regardless, Shell has become the lightning rod. As of June 9, Shell had received 24,000 claims in Louisiana and 6,000 in Florida, Frederick said. That makes Shell by far the biggest target of frustration among drivers.

By contrast, Marathon Ashland has reported receiving more than 12,000 calls since its problems surfaced in early May. United Refining and a subsidiary have received about 1,300 claims. Chevron, which received the bad gas refined by Shell and sold it to retail customers at 40 locations, had received 3,324 claims as of late last week, company spokesman Pierre DeGruy said.

That’s more than 46,000 claims altogether.

United Refining’s Loughlin said it’s far from clear that the problems are over, and that they won’t affect drivers in other parts of the country before the end of the summer driving season.

“I think it has the potential to continue,” he said. “And who knows where it’s going to end?”

Anyone wishing to file a claim for repairs resulting from the tainted gas purchased at Shell or Texaco stations should call Shell toll-free at (877) 825-2467. Chevron customers wishing to make a claim should call that company at (800) 362-8900.

Keith Darcé can be reached at [email protected] or at (504) 826-3491. Stewart Yerton can be reached at [email protected]

or at (504) 826-3495.

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