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FACTBOX-U.S. releases more fuel from heating oil reserves post-Sandy
November 12, 2012 / 4:12 PM / 5 years ago

FACTBOX-U.S. releases more fuel from heating oil reserves post-Sandy

NEW YORK, Nov 12 (Reuters) - The U.S. government has
released more fuel from strategic heating oil reserves to
further alleviate fuel shortages in New York, New Jersey, and
Connecticut caused by Hurricane Sandy.
   New York and New Jersey motorists have faced the unwelcome
return of 1970s-style gasoline lines after Sandy severely
disrupted the region's fuel chain two weeks ago. Concerns about
heating oil supplies grew after a wintry storm dumped snow and
dropped temperatures in the fuel-strapped 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. 
    Following is a list of the responses by government agencies
and oil companies to deliver more fuel to New York, New Jersey
and Connecticut. 
    * HEATING OIL RESERVE: The U.S. Department of Energy late
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 on Thursday ordered
gasoline rationing in the city based on license plate numbers
beginning last Friday. The move followed a similar regime
implemented in New Jersey last week. 
    * 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
    * 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.  
    * 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
    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.

    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 and Sofina Mirza-Reid)

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