US marketer task force to study Hurricane Sandy fuel lessons
New York (Platts)--17Dec2012/513 pm EST/2213 GMT
US petroleum marketers have formed a post-Hurricane Sandy task force to
study changes that need to be made before the next catastrophic East Coast
event occurs, according to Dan Gilligan, president of the Petroleum Marketers
Association of America.
One big focus of discussion will be on streamlining communications
between marketers and state and federal agencies. That should help speed
approval of fuel specification and other waivers ahead of time when a storm
takes aim at a vulnerable fuel supply area.
"We could have had communications all set up" ahead of Sandy, said
Gilligan in a recent interview, noting that weather forecasts were spot-on
with expectations of where damage would occur. "Waivers could have been
issued before the storm hit. That would have had the industry prepared to do
whatever they can to mitigate the damage," he said.
Article continues below...
Request a free trial of: Oilgram News
Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
Sandy was a particularly tough storm for the industry to deal with, he
said. "The density of the population is something no one had ever dealt with
before," said Gilligan, adding that, on top of that, the major port of New
York Harbor shut, as did two major pipelines bringing product into the
region -- Colonial and Buckeye.
While Hurricane Katrina's devastation was enormous, with Sandy, "to have
so many people in the dense areas of New York and New Jersey subject to this,
it was just a major strain on every aspect of our industry," said Gilligan.
Bringing fuel in from outside the region turned out to be "a much more
difficult circumstance than what we run into in the South," he said, citing
needs to register with each state and deal with various tax schemes.
"Marketers had trucks full of fuel ready to deliver into New Jersey, but they
could not come into the state because they were considered an importer of
"The markets in the urban East Coast states are far more regulated" than
markets in the South, he said. "That's something we need to work on going
forward, is anticipating all of those intrastate things that are going to
have to be done better next time and handled more quickly."
It took "several days" to get some of the taxes waived and states did
not coordinate their decisions, said Gilligan. For example, New Jersey waived
some of its tax requirements a few days before New York did. "That created
concern because marketers in that region do business in both states," he said.
The marketer task force hopes to share its findings with state and federal
regulators before the next storm hits.
"They have to address the entire sequence, from refiner to pipeline to
trucking to gas station. They've got to address the bottlenecks from top to
bottom if they want to be better prepared the next time around," said
He said some New York and New Jersey legislators are seeking to force
marketers to install backup power generators. "Yes, having electric supply at
a gas station was important in many cases; however ... there wasn't any
product really available to get to stations even if they had electricity."
"To throw a $50,000 requirement on a gas station whose bottom line is
probably $40,000 a year in net profit...what it would do would actually force
some of the smaller stations to close," said Gilligan.
He expects those bills won't become laws, but perhaps a compromise will
be reached where tax credits are given to some companies to have hookups for
generators installed. While the National Guard had some generators available
for use after Sandy hit, they weren't always compatible with the electrical
connections at gas stations.
--Beth Evans, firstname.lastname@example.org
--Edited by Katharine Fraser, email@example.com