Factbox: Waivers and tankers bring post-Sandy fuel relief

NEW YORK Mon Nov 5, 2012 2:53pm EST

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NEW YORK (Reuters) - The U.S. government waived shipping restrictions and environmental rules, bought millions of gallons of gasoline and diesel, and eased tax requirements to help alleviate fuel shortages afflicting homeowners and businesses after Hurricane Sandy battered densely-populated New York and New Jersey.

The storm cut off fuel supplies, bringing 1970s-style gasoline lines to the New York City metropolitan area, the most populous in the United States with about 20 million residents, including the states of New York, New Jersey and Connecticut.

The disruption of the network of refining, pipeline, and import terminals and shipping channels that keep the Northeast stocked with fuel, prompted the government and industry suppliers to make one of the biggest efforts in decades to move gasoline and diesel to the region.

By Monday, one week after Sandy hit, the lines of vehicles and people on foot waiting for gasoline began to shorten. But with cold weather forecast this week, concerns grew for homes without electricity or short of heating oil.

Following is a list of the response by government agencies and oil companies to deliver more fuel to New York and New Jersey.

WHAT'S BEING DONE

Some efforts are under way to aid the flow of fuel, although it is unclear how quick or effective they will be.

* HEATING OIL RESERVE: The U.S. Department of Energy has loaned 2 million gallons of ultra low sulfur diesel to emergency responders in New York and New Jersey from the Northeast emergency heating oil reserve to help speed recovery efforts.

* JONES ACT WAIVER: The Department of Homeland Security issued a blanket waiver of the Jones Act on Friday in an attempt to relieve fuel shortages gripping the Northeast after the storm shut refineries and cut power to gasoline stations.

The waiver allows foreign-flagged ships transporting oil products, such as gasoline and diesel, to embark from the Gulf of Mexico through November 13 and deliver the fuel up to a week later to New England and Mid-Atlantic states. The ships must discharge by November 20.

The waiver was expanded on Saturday to include blending components used to make gasoline and completed fuels.

* EPA WAIVERS: The U.S. Environmental Protection Agency waived the low-sulfur requirements for diesel in New York City area and Pennsylvania through November 20.

* FUEL PURCHASES/DISTRIBUTION: The U.S. Defense Logistics Agency (DLA) will buy 285,000 barrels of unleaded gasoline and 238,000 barrels of diesel for areas hit by Sandy, with 230 trucks on contract to distribute fuel.

The New York National Guard distributed 20,954 gallons of fuel at three gas stations in the New York City boroughs of Brooklyn, Queens and Staten Island on Saturday. About 287,000 gallons of gasoline and 170,000 gallons of diesel were moved into the area.

DLA is filling an order by the Federal Emergency Management Agency (FEMA) for 300,000 gallons for distribution in Freehold, Egg Harbor, and West Orange in New Jersey, 200,000 gallons for New York and New Jersey airfields and 80,000 gallons for Verizon Communications Inc

* FUEL LOANS: The U.S. Department of Energy loaned nearly 50,000 barrels of ultra-low-sulfur diesel from the Northeast heating oil reserve to emergency responders in New York and New Jersey. The diesel can be used to fuel electrical generators, water pumps, buildings, trucks and other vehicles.

* TAX BREAK: New York temporarily lifted tax and registration requirements on tankers docking in New York Harbor.

* FUEL MERCHANT WAIVER: New Jersey issued a waiver allowing fuel merchants to buy fuel from suppliers outside of the state, which lasts through November 7.

* FUEL WAIVERS: The Environmental Protection Agency has waived clean gasoline across the eastern seaboard and clean diesel rules in New Jersey through November 20, to boost supply.

The waivers, in theory, make it easier for refiners to produce more volume of the higher-sulfur fuel and make it simpler to buy additional supplies from other regions or countries, although it does nothing to ease the logistics snarl.

FEMA director, Craig Fugate, suggested it could help restore power to gasoline stations.

* IRS WAIVER: The Internal Revenue Service will not charge a penalty when dyed diesel fuel, normally used for farming, home heating, and local government buses, is sold for highway use.

INDUSTRY EFFORTS:

* TANK TRUCKS: PBF Energy, an independent refiner, whose two East Coast refineries quickly resumed normal output following Sandy, said it is loading trucks at its 190,000 bpd plant in Delaware City to bring gasoline and diesel to the region. It also said that some northern New Jersey customers were driving the oil tankers to the refinery's rack.

* Sunoco was trucking fuel from southern New Jersey and upstate New York to northern New Jersey, New York City and Long Island.

DEMAND

The East Coast consumes about 5.5 million barrels per day of fuel, more than a quarter of the country's total.

Within that, the mid-Atlantic region -- termed PADD 1B, the area hardest hit by the storm and comprising New York, New Jersey, Pennsylvania, Maryland and Washington D.C. -- accounts for about a third of the total for the region.

The region consumes just over 1 million bpd of gasoline alone, plus another 166,000 bpd of jet fuel, 250,000 bpd of diesel and 133,000 bpd of home heating fuel oil, according to federal government data on final fuel sales in the area.

STOCKPILES

The storm struck at an already delicate moment for the regional market, with stockpiles of motor fuel at unusually low levels because the structure of the oil futures market, called "backwardation," discourages companies from holding inventories as future prices are cheaper than current ones.

For instance, PADD 1B gasoline inventories hit the lowest level on records dating back to 1991 in the week to September 28. They have risen by 3 million barrels since then, but are still 10 percent below the five-year average, according to DOE data.

PADD 1B distillates stocks -- which includes heating oil and diesel, and is a particular concern ahead of the winter -- are now 45 percent below the five-year average. Stockpiles hit their lowest level since May 2008 in the week to October 12.

(Reporting by Jonathan Leff and Matthew Robinson; Editing by Grant McCool)

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