Flood gates in Vicksburg were installed last Thursday stopping all rail traffic on the harbor. Rail trans-load facilities began operations on Friday, and all alternate rail loading locations will be operational later this week, the company said Monday. As an added precaution, additional levees have been added to the dike walls surrounding the refinery.

Ergon plans to remain operational throughout the flood and hopes to minimize refinery disruption. If conditions change or worsen, however, Ergon will adjust those plans accordingly, the company said.

The U.S. Army Corps of Engineers projected that the flood will crest in Vicksburg on May 19 at 57.5 feet (17.5 meters).

The surging waters of the Mississippi and Ohio rivers have sidelined river shipping throughout the central U.S. The flooding has caused a back-up of water traffic on other rivers as well due to various lock closures combined with additional problems downstream.

One source said that the river system is effectively shut down. High waters are not allowing many vessels to float under bridges in many states up and down the Mississippi. The confluence of the Ohio and Mississippi rivers at Cairo, Ill., is closed to river traffic for at least another week. Shipping is not allowed past Caruthersville, Mo., because of fears that boat wakes could top levees. Backwater flooding on the Arkansas River has that marine highway closed too. Such problems will roll south with the high water as it moves toward the Gulf of Mexico.

Even when the water levels subside, out-of-position fleets and backlogged shipments will extend logistical headaches well into June, observers pointed out.

Rail and trucking companies are demanding higher prices from shippers whose deliveries cannot wait for the rivers to go down. Several sources said it is challenging to find transportation at any price, and the flooding has posed a logistical nightmare.

One regional news report revealed that the American Waterways Operators trade group was breathless after a conference call last Friday with the U.S. Army Corps of Engineers and the Coast Guard. The group is trying to negotiate a reopening of the shipping lanes to alleviate a situation that could be described as devastating.

Meanwhile, the West Coast is also struggling with its own set of base oil availability circumstances. Buyers say that a combination of supply issues has wrought havoc with little relief in sight. Chevron sales restraints are ongoing, according to direct customers. The impact of the Holly 50 percent sales control has hindered distribution on the West Coast with the local terminal apparently sold out, sources say.

A fire that interrupted operations in late March at Evergreen Oil has grounded that plant, and a restart date is unclear, regional buyers lament. And last but not least it was understood that Bango recently informed its customers that it would withdraw from the lubricant base oils market immediately.

On a bright note, however, San Joaquin successfully completed its planned turnaround earlier this month and the facility is up and running with a slight increase in capacity, the company said.

Upstream, crude oil prices tumbled more than $16 per barrel Monday May 2 through Friday May 6. Some analysts believed the drop in price was linked to the death of Osama Bin Laden on the previous Sunday and the reactions that ensued.

The U.S. dollar gained strength, and investors became skittish, causing oil prices to fall significantly. This week crude values have rallied somewhat, but whether they will shoot back up near $114/bbl is uncertain, energy experts say.

At the close of the Tuesday, May 10, NYMEX session, light sweet crude futures ended the day at $103.88 per barrel, a whopping loss of $7.17 compared to the week earlier settlement at $111.05/bbl.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.