NEW YORK (Reuters) - A third day of gasoline "panic buying" among storm-stricken New York area motorists prompted authorities on Fr iday to tap strategic oil reserves and waive shipping regulations even as limited deliveries resumed in the battered region.
The U.S. government said it will loan 2 million gallons of diesel from the Northeast emergency heating oil reserve to the military for recovery efforts, and waived rules barring foreign-flagged vessels from carrying fuel between U.S. ports in a bid to boost supplies.
New York Governor Andrew Cuomo said he would temporarily lift tax and registration requirements on tankers docking in the New York Harbor, which had just reopened to oil vessels. The main fuel pipeline from the Gulf Coast region also resumed shipments on F rid ay, while a handful of oil storage terminals also began shipping out fuel again under generator power.
"There should be a real change in conditions and people should see it quickly," Cuomo said.
While the waivers sent benchmark New York gasoline futures 2 percent lower, they will do little to address the biggest obstacle to getting fuel to consumers: the power outages that have shut nearly two-thirds of the filling stations in the New Jersey and New York City area and are still hindering service at major oil terminals and refineries along the harbor.
Faced with losing another day of business, William Torrens got up at 5 a.m. in East Rutherford, New Jersey, to queue for fuel. The owner of All Clear Plumbing waited for four hours in a six-block line at a Sunoco station before finally getting gasoline for his truck and home generator.
"I haven't seen something like this since I was a kid and there was a gas shortage," Torrens said, adding the shortage was costing his business money.
"I can't spare a truck to sit for four hours in line. When my guys run out of gas, they're going to have to sit."
In Brooklyn, taxi drivers hunted for fuel. Long lines formed outside even empty stations after rumors spread they would soon receive fuel deliveries. Officials said the number of cabs on the road by Friday morning was down 24 percent from last week.
By the end of the Friday, motorist group AAA said the situation was slowly improving as some areas had their power restored. But the U.S. Energy Information Administration said two-thirds of service stations in the New York City area were still without gasoline for sale.
Prices at the pump have remained steady despite the shortages, AAA said, averaging just below $4 a gallon in New York City, 2 cents lower than last week. However, on Long Island, where only a third of all stations were working, average gasoline prices jumped 5 cents from a day earlier.
But online, Craigslist users started offering gasoline for as much as $15 a gallon to motorists and homeowners not wishing to brave the lines.
There were some signs the situation could improve as the complex New York Harbor network of terminals, storage tanks and pipelines was finally returning to service.
Speaking with Governor Cuomo at a press conference, Rear Admiral Daniel Abel of the U.S. Coast Guard said fuel barges in New York Harbor may be allowed to pump gasoline directly from barges into oil tanker trucks waiting on the dock.
"We're looking at creative alternatives," Abel said. "They (can) hose the fuel directly from the barge to a truck, if they can do that safely."
An oil tanker carrying 2 million gallons of gasoline docked overnight in Newburgh, New York, 60 miles north of Manhattan. Other ships were finally offloading cargoes in the harbor after being stuck at anchor for the past week.
Colonial Pipeline, a 5,500-mile (8,900-km) network that runs from the Gulf Coast refining center up the eastern seaboard, said late on T h ursday it had resumed fuel deliveries at its Linden facility in New Jersey, the terminus of the line.
The U.S. Department of Energy said late Friday it will loan diesel from the Northeast emergency heating oil reserve to the military to distribute to emergency responders in New York and New Jersey, starting as early as Saturday.
It is only the second time the U.S. government's emergency Home Heating Oil Reserve has been tapped since it was established by President Bill Clinton in 2000.
But many problems remain. Phillips 66 Bayway refinery in New Jersey, known as "the gasoline machine" by oil traders, may be shut for weeks due to flood damage, a source familiar with operations said. The company has said that a decision on when to reopen will be made "once all assessments are complete." A third of the region's refining capacity was shut by the storm.
Phillips' Linden fuel terminal was supplying only emergency response vehicles as of Friday afternoon.
The majority of oil terminals around New York Harbor remain shut without power, while some were damaged in the storm. They already have gasoline in their storage tanks, but without electricity they cannot move it into tanker trucks for distribution.
Terminal operator Buckeye Partners LP said the Federal Emergency Management Agency (FEMA) was helping to bring power generators to terminals. FEMA spokesman Lars Anderson confirmed in a blog post that the agency is "coordinating with states and the private sector to accelerate the distribution of fuel to retail locations."
But those measures were cold comfort to residents stuck in hours-long queues, often with no guarantee that supplies would be available when they got to the front of the line - or that enough power would be restored to get more stations open.
The situation was wearing on people in the region. Juliana Smith, a full-time student, spent 2-1/2 hours in line to fill two five-gallon containers on Fr iday, an hour more than on Thursday.
"It's psychotic," she said. "People are angry. We have no power. No heat. We need gas for the generator and our Ford Explorer, which is a monster."
The fuel crisis cut traffic over Manhattan's main bridges and tunnels by nearly 50 percent from normal, with some frustrated commuters and taxi drivers choosing to stay home rather than search out scarce fuel.
There was "panic buying" in the region, Hess Corp (HES.N) Chairman and Chief Executive John Hess said on a conference call.
Travel across the three main bridges and tunnels to Manhattan was down 47 percent from normal o n F riday morning, according to data from the Port Authority.
"This is in part due to the gasoline shortages. It's probably also due to people staying home today - they've really had to fight to get where they want to go over the past few days," said New York Department of Transportation spokesman Adam Levine.
Rumors circulated on social media about which sites had gas or were due to take a delivery.
"I heard it on Facebook," said Manuel Ortiz, 33. He was first in the line of more than 60 people waiting with red and orange gasoline canisters at a station in Brooklyn.
Two police officers placed a blue barrier in front of Ortiz, who said he had been waiting since 2 a.m. A fist fight broke out earlier, he said, when one driver tried to cut in front of another.
"I just want the gas. I don't care how long I have to wait," said Ortiz, a delivery driver whose car was costing money by the day. "The car is getting ticketed. I have to get gas."
Additional reporting by Chelsea Emery and Emily Flitter, Joshua Schneyer and Jonathan Leff in New York, Soma Das in Bagalore; Editing by James Dalgleish, David Gregorio, Dan Grebler and Jim Marshall