Five companies to use waiver to ship fuel to U.S. Northeast

Tue Nov 13, 2012 12:57pm EST

* Jones Act waiver expires Nov. 13, ships must unload by Nov. 20

* Waiver attracts 5 shipments, more could come on Tuesday

* No word from DHS on potential extension of waiver

WASHINGTON, Nov 13 (Reuters) - At least five companies will use a rare waiver that expires Tuesday allowing foreign-flagged ships to take oil products and additives from the Gulf of Mexico to the Northeast to help relieve a fuel crunch after Superstorm Sandy, the federal government said.

The Department of Homeland Security issued on Nov. 2 a blanket waiver of the 1920 Jones Act to help get fuel to the region. Shortages continue to plague the New York City and Long Island areas after the storm.

The DHS has not yet said whether the waiver will be extended.

Five companies had planned to use the waiver as of Nov. 9, the Department of Transportation's Maritime Administration, or MARAD, said on Tuesday. Each company was shipping one cargo each. MARAD did not name the companies.

More shipments could be announced later on Tuesday, MARAD added. Companies do not have to tell the government they intend to ship oil to the Northeast until 24 hours after loading in the Gulf of Mexico.

The waiver allows foreign-flagged ships to load oil products from the Gulf of Mexico until Nov. 13 and deliver them to ports in the Northeast by Nov. 20.

Oil traders could profit by nearly $2 million on each exempt cargo of gasoline they are able to ship from Houston to New York, according to Reuters' calculations.

But the journey from the Gulf Coast to New York Harbor can take about a week, and some shippers are concerned about repercussions if they are not able to deliver by the deadline.

The Jones Act, part of the 1920 Merchant Marine Act, was created to support domestic jobs in the shipping industry. It requires goods moved between U.S. ports to be carried by ships built domestically and staffed by U.S. crews.