Refined Petroleum Product Reserve Will Ease Potential Fuel Supply Disruptions in Northeast U.S.

WASHINGTON – As part of the Obama Administration’s response to Superstorm Sandy, Energy Secretary Ernest Moniz today announced the creation of the first federal regional refined petroleum product reserve containing gasoline. Based on the Energy Department’s lessons learned from the major fuel supply disruption in the aftermath of  the storm, the Department will establish two Northeast reserve locations near New York Harbor and in New England.  Each location will store 500,000 barrels of gasoline, enough to provide some short-term relief in the event of significant disruptions. The new reserve complements the Northeast Home Heating Oil Reserve, a one million barrel supply of diesel for the Northeast. Emergency withdrawals from NEHHOR were used for the first time in response to Superstorm Sandy to supply first responders and emergency generators in the region. Today’s announcement builds on the Obama Administration’s broader commitment to enable a more secure and resilient energy infrastructure.

“In addition to our mitigation and international efforts, the President’s Climate Action Plan calls on us to take measures today in order to better prepare for the effects of climate change we already see occurring here at home,” said Secretary Moniz. “Building on lessons learned from recent extreme weather events like Superstorm Sandy, today we are announcing the establishment of a refined petroleum product reserve for the region surrounding New York Harbor and the Northern New England area to help ease the effects of potential future gasoline supply disruptions.”

“Like sandbags and stockpiles of food and medicine, this gasoline reserve is what the Northeast needs to be ready for supercharged storms from climate change,” said Senator Edward J. Markey, who in 2000 authored legislation establishing the Northeast Home Heating Oil Reserve, and has introduced legislation since 2009 to modernize the Strategic Petroleum Reserve with an emergency gasoline reserve like the one proposed today by the Department of Energy. “This gasoline reserve will ensure that just because a dangerous storm soaks our region, it doesn’t mean that consumers have to get soaked at the pump.”

“The sudden, massive gas supply shortage after Superstom Sandy resulted in interminable line, panic and delivered a gut shot to the region's economy. That's why we called for regionally-placed reserves to ensure an uninterrupted fuel supply in the event of future storms like Sandy,” said Senator Charles E. Schumer. “The Department of Energy, with foresight and purpose, has taken a great stride to meet that challenge today and I applaud their plan to establish a Northeast refined petroleum reserve right here in New York Harbor.”

With major product supply and distribution infrastructure located along U.S. coasts, Northeast energy supply and reliability is vulnerable to the impacts of hurricane winds, tidal surges, severe wind, snow and icing conditions. In 2012, Superstorm Sandy caused heavy damage to two refineries, and more than 40 terminals in New York Harbor were closed due to water damage and loss of power, leaving some New York gas stations without fuel for as long as 30 days.

At present, the Energy Department’s Strategic Petroleum Reserve (SPR) contains crude oil but does not contain refined petroleum products.  Establishing a refined petroleum product reserve of gasoline - acquired and owned by the U.S. government, and stored at leased commercial storage terminals along the East Coast - will help mitigate the impacts of sudden and unexpected supply interruptions.

The Department anticipates awarding contracts for commercial storage, service, and product acquisition in order to launch the reserve by late summer of 2014.

Energy Infrastructure Security and Fuel Resiliency

As laid out in President Obama’s Climate Action Plan, the Administration has launched the federal government’s first Quadrennial Energy Review process to address the challenge of leveraging America’s domestic energy resources while strengthening U.S. energy security. The first installment of the QER review will focus on the United States’ infrastructure for transmitting, storing and delivering energy.

As part of this process, the Energy Department will conduct a series of regional fuel resiliency studies to analyze the specific challenges faced by different parts of the country that are vulnerable to a variety of weather-related natural disasters that could potentially affect energy supply infrastructure. Because of the interdependencies inherent to the U.S. energy infrastructure, even where regional refined product reserves may play a role in enhancing fuel resiliency, they will be but one part of a system intended to minimize potential disruptions in fuel distribution. The Department is also continuing to work at the federal, state and local level to enable more resilient electric grid networks in communities across the country.