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Power outages at hundreds of gas stations and a distribution bottleneck due to flooding damage and power loss has caused a gasoline shortage in the New York metropolitan area that may not be cleared up for at least a week, according to industry experts.
What was a problem for drivers when Superstorm Sandy ended two days ago has become a nightmare for frazzled motorists who find themselves in gas lines that can stretch on for hours. Some lines were hundreds of cars long in sections of New Jersey and New York on?Thursday, and in a number of locations police monitored the lines which interfered with traffic flow in some areas.
The problem is not gasoline supplies, but the ability to distribute it, especially from the critical area around Linden, N.J. An estimated 75 percent or more of the gas stations in New Jersey were closed either because they had no gasoline, no power or both, said Sal Risalvato, executive director of the N.J. Gasoline, Convenience, Automotive Association. His organization represents about 1,000 gasoline stations in New Jersey.
?What I?m seeing is here?s a combination of problems. Power is at the root of it. That means gasoline that is already in inventory, already refined in those big tanks you see along the side of the turnpike, they can?t get that gasoline into the delivery trucks without power,? said Risalvato.
Those ?white tanks? along the New Jersey turnpike are gasoline terminals, owned by a number of companies, and the question for the industry is how quickly can normal operations resume after power is restored. A number of New Jersey based companies, like?NuStar?and Shell?s Motiva, reported that the storm surge drove water into the terminal areas, and it is unclear when they will be operational.
PSE&G, which powers that critical region, expects its substation to be back in working order and have electricity running to the critical chokepoint area by Saturday.
?We are focused on the major refineries area in Woodbridge, Linden, Elizabeth part of New Jersey. We expect to have the substations back by late tomorrow/Saturday, so what that means is power will be restored to that region,? said PSE&G CEO Ralph Izzo on ?Fast Money Half-Time.?
?Now if there?s a specific set of circumstances to a particular customer in that region that will push it out further, but that region will be able to receive power Saturday,? he said.
Izzo said PSE&G has a list of critical locations that are a top priority. That includes hospitals but also refineries. Izzo said residential customers, which could include gas stations, should have power by the middle of next week at the latest. There are still about 780,000 PSE&G customers without power, and other utilities also serve New Jersey.
The refineries that remain out of commission, especially the giant gasoline-producing Phillips 66 Bayway refinery, are not at the root of the current supply shortage. It is mainly the result of trucks not able to pick up deliveries or make deliveries.
?I think you?re going to see some easement over the weekend,? said Risalvato. ?You?ll see normalcy next week. You?ll see things are going to happen all at once. Power is going to be restored. Roads are going to be clear. It?s like you?re drain is clogged and all of a sudden it?s unclogged.?
That assurance is cold comfort to cranky consumers on the East Coast who waited in long lines at the pump to fill up their cars and gas cans to fuel home generators.
Though retail gasoline prices were steady or dropping at the pump in some places, they could start to spike in hard-hit areas of the storm, particularly the New York metropolitan region.
(Read More:?Scenes From Hurricane Sandy.)
Shell, which has many services in the storm-hit zones, advised consumers to conserve fuel and avoid unnecessary driving while Shell-branded stations are being reopened and restocked.?BP?said one third of its branded gasoline stations in the New York and?New Jersey area were shut.
?You have a lot of stations that are closed, and they?re closed due to no power or no product or both,? said Kevin Beyer, president of the Long Island Gasoline Retailers Association. He said less than half the more than 600 gas stations his organization represents between Brooklyn and Montauk, N.Y., have both gasoline and power.
But the stations with power are running short of supply, and he does not foresee many deliveries before Friday or in the region because of flooding and damage to terminals in Inwood, Holtsville and Lawrence.
?There?s a lot of disruption right now,? Beyer said. ?It?s the terminals themselves. You have terminals that are running very low. Terminals that might be out. The power?s been sporadic and there?s no phone service,? making it hard to check on the status. He said there are some trucks running but not many.
?The quick and dirty is that in the Northeast, about 24 percent of the refining capacity that was in the line of the storm is out,? said Addison Armstrong of Tradition Energy. ?That?s really just two refineries, the Bayway refinery in New Jersey and another smaller refinery there,? said Addison Armstrong of Tradition Energy.
Armstrong said there could be a sharp jump at the pump, but some gasoline experts believe the spike will be short-lived because of adequate gasoline supplies nationwide.
(Read More:?Sandy's Economic Cost: Up to $50 Billion and Counting.)
Andrew Lipow of Lipow Oil Associates said while gas prices might jump in the New York region temporarily, he still expects to see a lower national average in the next couple of weeks. ?I can?t speak about what the individual gas stations are going to do there, but when I look at wholesale prices off of the December contract, there might be some higher prices in New York temporarily but retail prices in the rest of the country are falling,? he said.
Lipow said the New York area airports appear to have sufficient jet fuel.
The two east coast refineries that remained closed include?Phillip 66?s?big Bayway refinery in Linden, N.J., and the?Hess?refinery in Port Reading. East coast refineries, including four in the Delaware and Philadelphia area, account for about 6.5 percent of U.S. refining capacity. Besides the refineries, gasoline terminals in northern New Jersey remained closed due to power outages and flooding.
Source: http://www.nbcnews.com/business/northeast-may-see-long-gas-lines-week-1C6812226
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