OPEC has once again moved…
In a somewhat surprising move,…
The aftermath of Hurricane Sandy left the entire North East Region of the US in a severe gasoline and crude oil supply shortage, and some experts believe that the scenario could become a regular occurrence in the future due to climate change, a lack of flood protection, and market changes that have removed any supply safeguards.
In recent years oil refineries in the region have reduced the extra supply that they hold onsite to run a more ‘just-in-time’ operation in an attempt to increase cash flow and profits. Also the government has downsized emergency reserves in the area, and most of the fuel terminals have decided to do away with their diesel generators and rely fully on the aging and vulnerable electrical grid. This means that any disruption to oil supply, or electrical supply effectively shuts down all operations at refineries and terminals.
Commander Linda Sturgis, at the Coast Guards regional command centre on Staten Island in New York harbour, witnessed Hurricane Sandy and said that, “when I saw that (14 foot) surge, I knew it would impact oil supplies. The public probably doesn't realize how critical the harbor is. It's the epicenter of fuel distribution for the whole Northeast.”
The harbour covers 125 square miles and accepts 1.5 million barrels of oil a day from all around the world. The oil is then refined and sent back out by barge, tanker, pipeline, truck, and rail to supply approximately 60 million consumers across the whole East Coast.
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Refineries closed down due to damage caused by the surge, or just as a result of the lack of oil supplies; tanks holding fuel were damaged and started to leak; debris in the harbour prevented any water traffic; buoys were dragged out of position; terminals and refineries with fuel couldn’t even export the product by pipes, trucks, or rail, due to the fact that the electrical grid had been knocked out, and a lack of diesel generators meant that the pumps couldn’t work. Gordon Loebl, the captain of the port, said that “we had to clear debris and chart the bottom. Without doing that, tankers could run aground and create a major oil spill.”
Michael Green, from the Travel group AAA, explained that, “idle harbour terminals were a main bottleneck. Many had fuel, but it was stuck in storage.”
New York harbour is back up and running normally now, however, according to Reuters, the “fuel supply collapse has left a policy conundrum for officials, now more aware of the region's vulnerability.”
Perhaps the city of Rotterdam, Holland, could provide a good example to apply to New York. Europe’s number one oil port has all of its energy infrastructure located 10 to 20 feet above sea level for added protection. All fuel terminals have back-up generators, and a giant €450 million barrier can be closed to protect the harbours occupants when waters rise.
Jentsje Van de Meer, a Dutch coastal engineer, explained that, “in Holland we are born with the idea that the sea is a threat. We're prepared even for the storm that only happens once every 10,000 years.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com