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U.S. to set up emergency gasoline stockpile for Northeast

A man stands exhausted while waiting for over five hours to receive fuel from a gas station in Queens, a borough in New York which was left
A man stands exhausted while waiting for over five hours to receive fuel from a gas station in Queens, a borough in New York which was left

By Ayesha Rascoe

WASHINGTON (Reuters) - The United States plans to create a million-barrel gasoline reserve in the Northeast after Superstorm Sandy in late 2012 left motorists in the region without fuel, exposing vulnerabilities in the nation's fuel distribution network.

The $200 million stockpile will be held in two locations near the New York Harbor and in New England and should be operational by late summer. Each site will store 500,000 barrels of gasoline.

The Department of Energy said the emergency reserve would complement the nation's existing heating oil stockpile, which holds a million barrels of diesel fuel.

"This is part of a broader commitment to a more secure and resilient energy infrastructure," said Energy Secretary Ernest Moniz on a conference call.

With the Northeast consuming more than a million barrels of gasoline a day, the reserve would be aimed at providing some short term relief for consumers and first responders after major disasters.

Sandy battered the Northeast corridor in October 2012, destroying homes and buildings, closing refineries and disrupting gasoline supplies.

The storm prompted the administration to tap the heating oil reserve for the first time since it was established in 2000.

But with power lines down and more than 40 terminals in New York Harbor closed due to water damage, getting gasoline to consumers was also an issue.

The Energy Information Administration estimated in the days after the storm that as many as 67 percent of the gas stations in the New York metropolitan area were not open, either because they had no power for their pumps or had not been able to take delivery of fuel.

Lawmakers pressed the Obama administration to ensure the fuel crunch would not be repeated.

Senator Charles Schumer, of New York, said scarce gasoline supplies created panic in his state after Sandy hit, as people waited hours in line for fuel at the stations that were operating.

"This was adding salt into the wounds," said Schumer, who pressed for a regional reserve after the storm.

The department will lease space from commercial storage companies for the emergency stockpile, where it will be turned over as part of the storage facilities' stocks.

Moniz and Schumer acknowledged that the reserve was only one part of the solution to preventing future fuel disruptions.

One issue the reserve will not be able to address is how to overcome the electricity outages such as those caused by Sandy that shuttered gas stations.

States such as New York and New Jersey have looked at equipping gas stations with back up generators that would be able to operate after a natural disaster.

The idea of an emergency reserve for gasoline and other products had been floated in the past. Following the 2005 Hurricane Katrina, the U.S. considered stockpiling oil products, although that plan eventually fell to the wayside.

(Additional reporting by Susan Heavey, Timothy Gardner, Valerie Volcovici; Editing by Ros Krasny, Chizu Nomiyama and Sofina Mirza-Reid)

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