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FACTBOX-US releases more heating oil from reserves post-Sandy

Source: Thomson Reuters Foundation - Mon, 12 Nov 2012 22:23 GMT
Author: Reuters
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(Adds details on New Jersey ending gasoline rationing) NEW YORK, Nov 12 (Reuters) - The U.S. government has released more fuel from strategic heating oil reserves to further alleviate shortages in New York, New Jersey and Connecticut caused by Hurricane Sandy. New York and New Jersey motorists faced the unwelcome return of 1970s-style gasoline lines after Sandy severely disrupted the region's supply chain two weeks ago. Concerns about heating oil supplies grew after a wintry storm dumped snow and dropped temperatures in the region last Wednesday. State and city officials, as well as the federal government, have scrambled to get more fuel to the region, waiving shipping requirements, environmental rules and sending shipments to impacted areas. As New Jersey's supply crunch showed signs of easing, the state announced it would end its gasoline rationing system early Tuesday morning. Following is a list of the responses by government agencies and oil companies to deliver more fuel to New York, New Jersey and Connecticut. WHAT'S BEING DONE * HEATING OIL RESERVE: The U.S. Department of Energy late on Friday agreed to release an additional 100,000 barrels of ultra low sulfur diesel from the nation's emergency heating oil reserve to help ease fuel shortages in Connecticut. Previously, the DOE announced it would release about 48,000 barrels to emergency responders in New York and New Jersey from the Northeast emergency heating oil reserve to help speed recovery efforts. * GASOLINE RATIONING: New York City ordered gasoline rationing in the city based on license plate numbers beginning last Friday. The move followed a similar regime implemented in New Jersey, which the state plans to end on Tuesday. * 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 Nov. 13 and deliver the fuel up to a week later to New England and Mid-Atlantic states. The ships must discharge by Nov. 20. The waiver was expanded on Saturday to include blending components used to make gasoline and completed fuels. * 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. * 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. * FUEL WAIVERS: The Environmental Protection Agency has waived clean gasoline across the eastern seaboard and clean diesel rules in New Jersey through Nov. 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. The EPA waived the low-sulfur requirements for diesel in New York City area and Pennsylvania through Nov. 20. On Thursday, New York City Mayor Michael Bloomberg waived the requirement that buildings and homes in the city utilize heating oil with low sulfur diesel, increasing the fuel pool available. * 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 of fuel per day, 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 Sept. 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 Oct. 12. (Reporting by Jonathan Leff and Matthew Robinson; Editing by Grant McCool, Tim Dobbyn, Sofina Mirza-Reid and Andre Grenon)

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