* Foreign-flagged ships will be allowed to deliver fuel
* Waiver lasts through Nov. 13
* U.S. received only one waiver request
* Energy experts divided on level of relief from waiver
By Ayesha Rascoe
WASHINGTON, Nov 2 The U.S. government on Friday
sought to ease the fuel crunch that hit the Northeast after
Hurricane Sandy, saying it would provide emergency responders
with diesel from national reserves, and also allowing foreign
tankers in the Gulf of Mexico to bring fuel to the region.
The Department of Homeland Security waived the Jones Act, a
law that normally prohibits foreign-flagged vessels from
shipping gasoline, diesel and other petroleum products, from the
Gulf of Mexico to Northeastern ports. The waiver, effective
immediately, requires shipments to leave the Gulf region by Nov.
13 and arrive in the Northeast within a week.
With power still out at many ports and gasoline stations it
was unclear how much fuel was needed immediately and how quickly
it could get to customers.
The Energy Department also announced that it was tapping the
Northeast Heating Reserve for the first time, releasing about
48,000 barrels of ultra-low sulfur diesel for the Defense
Department to distribute to local and federal responders in New
York and New Jersey.
The fuel will be used to supply emergency equipment,
generators, buildings, trucks and other vehicles.
The Defense Department will begin drawing down as soon as
Saturday from the reserve, created in 2000, which holds about a
million barrels of diesel.
ONE WAIVER REQUESTED
Homeland Security said it had received only one request from
a company, which it did not identify, to waive the Jones Act.
The Merchant Marine Act of 1920, better known as the Jones
Act, was created to support jobs in the maritime industry. It
requires goods moved between U.S. ports to be carried by ships
built domestically and staffed by U.S. crews.
The American Maritime Partnership (AMP), a domestic maritime
industry group, said it was not aware of any cases where U.S.
vessels had not been available to transport fuel, but it
supported waivers in the aftermath of the massive storm.
"We will not oppose waivers that are necessary to facilitate
delivery of petroleum products into the regions affected by
Hurricane Sandy," AMP said in a letter to President Barack Obama
and heads of several government departments.
Benchmark New York Harbor gasoline futures dropped 5
cents, or 2 percent, on news of the waivers, which could allow
shippers to divert cargoes enroute to Europe or Latin America to
the depleted Northeast market.
NO URGENT NEED?
Craig Fugate, the head of the Federal Emergency Management
Agency, told reporters several government agencies were trying
to figure out how many ships were available. He said the Energy
Department held a conference call with major suppliers.
"We're working ... on which ships can be potentially
diverted to New York," Fugate said.
Shipping sources said the slow return of power to ports in
the New York Harbor had them considering delivering fuel to
nearby cities such as Boston.
Energy experts said the waiver might not bring immediate
relief to fuel-strapped New York and New Jersey, where two
refineries were shut by Sandy. But, in the longer term, shipping
alternatives could help ensure steady supply.
"There appears to be no urgent need at the moment" for a
Jones Act waiver, said Bob McNally, head of Washington-based
consulting firm the Rapidan Group. He said shortages so far have
been at the retail level rather than the maritime import level.
David Goldwyn, who headed international energy affairs at
the U.S. State Department until early 2011, said the waiver
could boost the ability to deliver fuel to the East Coast now
that tankers that were set to go to Europe or other destinations
can dock there without restriction.
"The travel from Gulf Coast to the East Coast is pretty
quick," said Goldwyn, who currently runs Goldwyn Global
Strategies, an energy research and strategy company.