Deliverable Fuels Industry Weathers a Busy Hurricane Season

Regional and state associations help preserve the calm through the storms

In a sense, the Northeast’s energy marketers are already in the disaster management business. Called on to complete emergency deliveries and repairs during cold New England nights and afterhours snowstorms, most of the region’s delivery drivers and service technicians know what it’s like to work with the clock and the calendar against them.

Of course, Mother Nature doesn’t have to wait until heating season to put the heating industry in jeopardy. The Atlantic hurricane season runs from June 1 to November 30, and while the Northeast counts its blessings for having so far been spared the wrath of a Category 4 or 5 hitting its shores, hurricanes do not have to make landfall in the Northeast to threaten fuel supplies.

Thankfully, the federal and state governments have policies in place to help ease the strain on fuel supplies in emergency situations, and it’s during these periods that the industry’s state and regional associations excel by providing invaluable weather updates, regulatory alerts, and perhaps most importantly, peace of mind.

Weather Updates

Working closely with expert meteorologists like Fax-Alert Weather Service’s John Bagioni, regional associations such as the New England Fuel Institute (NEFI) and Propane Gas Association of New England (PGANE) provide their dealer members with weekly or even daily updates on the possible paths and impacts of tropical storms and hurricanes across the Atlantic, the Caribbean and the U.S.

Combining satellite images with weather maps, data projections and detailed discussion, these updates go far beyond the typical forecast shown on the nightly news. They essentially put the business owner in the meteorologist’s chair, with interpretations that translate across industries.

In a phone interview with Oil & Energy, Bagioni explained that 2017’s Atlantic hurricane season has been something of a return to form. “This was one of those years where the combination of ocean temperature patterns and upper air conditions across the upper Atlantic and over Africa seemed to be coming together for a surge of tropical activity,” he said.

“There have been some theories that the patterns are changing and we aren’t going to see those factors coming together [anymore].” However, with the consecutive formations of hurricanes Harvey, Irma and Jose, those theories “got blown right out of the water,” Bagioni punned. “Lo and behold, the old rules of meteorology worked. High ocean temperatures, low dust and favorable upper air patterns all came together, and we had two Category 5s and a Category 4 in the space of 10-14 days.

“Mother Nature finds a way to even things out over a period of years,” Bagioni concluded, “not only with temperatures, but with hurricanes and snowstorms.”

Regulatory Alerts

Following state of emergency declarations, the federal government typically waives certain regulations in order to help businesses aid in the recovery of affected areas. In a move seen much less frequently, on August 31, the Department of Energy (DOE) authorized the sale of up to 5.3 million barrels of crude from the Strategic Petroleum Reserve (SPR) to refineries affected by Hurricane Harvey. This marked the first SPR release since 2012.

Also on August 31, in anticipation of refinery delays and pipeline disruptions, the Federal Motor Carrier Safety Administration (FMCSA) waived hours-of-service requirements for the states of Alabama, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia, as well as Washington, D.C., allowing for the immediate transportation of fuel products into affected states and jurisdictions.

A day earlier, the Internal Revenue Service (IRS) had issued a notice waiving the penalty that typically applies when dyed diesel fuel is sold for highway use. This notice applied only to counties and areas affected by Harvey, and EPA reiterated that the sale, distribution and use of high-sulfur (greater than 15 parts-per-million) diesel fuel remained prohibited.

Additionally, following Hurricane Irma’s landfall in the Caribbean islands and Florida, the Trump Administration issued a limited waiver from Jones Act maritime restrictions through September 15 to facilitate movement of refined petroleum products from New York, Pennsylvania, Texas, and Louisiana to South Carolina, Georgia, Florida, and Puerto Rico.

All of the above updates, along with other notices, were included in the September 11 edition of NEFI’s weekly NEON e-newsletter (and some in the September 5 edition as well).

Several of the advisories were also included in a September 1 email in which NEFI assured its members and supporters that although Harvey had affected nearly a quarter of the nation’s refining capacity, “suppliers report no meaningful shortages of motor or heating fuels in the Northeast or disruptions to its various supply chains, including barge and rail shipments. Product is being moved to where it needs to go and regulatory waivers are assisting in this process.”

Peace of Mind

While regional associations like NEFI and PGANE helped dealer members assess the situation, several state association leaders were helping to reassure consumers by reaching out to them through local media channels.

“We’re in a good situation in terms of fuel supplies, not so in the southeastern United States,” said Vermont Fuel Dealers Association Executive Director Matt Cota to ABC 22 News in Williston, VT, after Harvey’s landfall. “We’re still a month, two months away from the heating season,” Cota added, noting, “We are well-supplied for heating oil and propane, and we don’t expect any changes in the weeks ahead.”

Less than two weeks later, following Irma’s landfall, Chris Herb, president of the Connecticut Energy Marketers Association, delivered a similar message to the Journal Inquirer, a newspaper based in Manchester, CT. “On the heating oil side of things, this has been a non-event,” he said. “I expect us to enter the heating season in a month or so with a strong supply and competitive prices as compared to natural gas.”

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