"Rumor" huh?  It was very obliging of CNN to print verbatim the propaganda of the Tennessee Petroleum Council that "the phenomenon seemed to be isolated to the Nashville area."  There are shortages everywhere served by the Colonial pipeline, which is most of the Southeast US.

What happened in Nashville is mostly due to a credibility gap.  After hearing government officials (and the Tennessee Petroleum Council) say for over a week that the situation would be fixed real soon now, as gasoline prices continued to rise, and then more and more stations went dry, people decided that they just didn't believe that it was going to be fixed anytime soon, which made a real problem even worse.

With declining petroleum product consumption, there is now a fairly substantial refining capacity excess in the US, even though much of this was shut-in for most of the year due to low refining spreads.  With huge refining spreads and with about half for the refining back online already, we should already be producing enough to keep up with demand, though problems transporting gasoline to the Southeast will continue until even more refineries come back online.

Vulnerability of the US petroleum supply to weather-related disruptions has been somewhat reduced, but if a little supply reduction causes this kind of disruption, just imagine what would happen if we had a real Katrina/Rita type event again.

Behold the power of stupid laws:

Following reports of high gas prices in East Tennessee and throughout the state, Attorney General Bob Cooper and Department of Commerce and Insurance Commissioner Leslie Newman Tuesday announced the launch of a joint effort to examine whether certain businesses are engaging in gas price gouging...

 "We are analyzing whether the spike in gasoline prices across Tennessee is the result of price gouging or a reasonable reaction to supply disruptions in the wake of Hurricane Ike," Attorney General Cooper said. "We are concerned with the spike in gasoline prices in the state, and Knoxville, in particular, where gasoline prices are reported to be among the highest in the nation. There is a difference between profits and profiteering." Under Tennessee law, unreasonably raising the price of essential goods, commodities or services in direct response to a natural disaster here or in another state is price gouging. Under Tennessee law, price gougers can be subject to a $1,000 civil penalty for each violation. Price gouging is also a criminal offense in Tennessee.