• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup

2

Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock

3

Current price of oil as of June 23, 2026

1

After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup

2

Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock

3

Current price of oil as of June 23, 2026

Was the gas shortage preventable?

By
Cyrus Sanati
Cyrus Sanati
Down Arrow Button Icon
By
Cyrus Sanati
Cyrus Sanati
Down Arrow Button Icon
November 5, 2012, 1:45 PM ET
Add Fortune on Google for similar content.

FORTUNE — A combination of bad policy and poor planning exacerbated fuel shortages in New York and New Jersey last week and over the weekend, creating yet another headache for residents impacted by Hurricane Sandy. With a lack of backup power at pipeline pumping stations and gasoline storage facilities, it has been difficult to deliver fuel to the hardest hit areas of the storm.

While New York Governor Andrew Cuomo said on Friday that the gas shortages should ease over the weekend, he has since changed his tune, saying on Sunday the problems will likely continue for an unspecified “number of days.” As such, drivers in the region shouldn’t expect a quick fix. Gas lines and rationing will continue as long as there remain kinks in the sensitive gasoline transport network.

Life seems to be getting back to normal for many residents a week after Hurricane Sandy disrupted the region. Most of Manhattan has power again and the subways and commuter train lines are nearly all restored. But the one stain in the relatively rapid recovery is the lack of gasoline throughout the region. Drivers in and around New York and New Jersey have to wait hours in gas lines that can stretch for miles. New Jersey recently instituted a bizarre even-odd license plate number filling system in an attempt to ration supply. Meanwhile, the federal government has authorized the military to rush 24 million gallons of gasoline to the region – 450,000 of which arrived this weekend. Despite all of this, gasoline continues to be in very short supply.

MORE: Obama vs. Romney: A small business voter’s scorecard

So why is it so hard to get gasoline to New York? The logistics behind the transportation of a gallon of gasoline from the refinery to the gas pump is an extremely sensitive process. Basically, a gallon of gas is created at a refinery, and then processed, shipped, stored and trucked to your local gas station. If the process breaks down at any one of those stages then the entire operation grinds to a halt.

Hurricane Sandy severely disrupted the gasoline supply chain, creating a number of broken links, which will take time for it to fully mend. First, Sandy knocked two of the region’s six refineries out of commission. The Phillips 66 Bayway refinery in New Jersey, the second-largest refinery on the East Coast, was flooded during the storm and is expected to be out of commission for a while. PSEG, the local utility, said during its earnings call Friday that it had restored power to the refinery, but that may be the least of the refinery’s problems if the flooding fried sensitive equipment which could take weeks to repair. Meanwhile, Hess’s (HES) Port Reading refinery had its power knocked out during the storm and just got it back on Saturday. Hess officials say it will be several days before the refinery can be restarted. The other refineries in the region are either running at reduced capacity or operating normally.

PBF Energy’s Delaware’s City refinery wasn’t significantly impacted by the storm and stands ready to send gasoline up north – but how? That gets us to the next major problem in the gasoline chain: shipping. Sandy knocked out power to a number of critical pipelines that provide the bulk of the region’s refined product needs. The lifeline of the East Coast is the Colonial pipeline system, a 5,500-mile network of refined product pipelines stretching from the nation’s refining center in Houston up to New York Harbor.

MORE: Uber NYC and the Sandy Surge

In order to move gasoline up the line you need a pumping station — without it, the gasoline just sits in the pipe. Unfortunately, Colonial lost power to its pumps in Lynden, New Jersey during the storm, cutting off this vital gasoline artery, starting a chain reaction that caused supply to rapidly dry up all along the East Coast. The same thing happened to the Buckeye pipeline, which runs gasoline into New York from the Midwest. Colonial said on Friday that it finally got generators out to its pumping station in New Jersey and started the process of moving gasoline back into the area, but on a limited basis. It could days or even weeks before the pipeline is back up to full capacity. Meanwhile, PSEG said that it has restored power to the Buckeye pipeline and to its pumping stations in New Jersey.

While pipelines are usually the most reliable and cost-effective way of transporting gasoline, they aren’t that great in an emergency. That’s because there is just so much you can shove into a pipeline before it bursts. Additionally, gasoline moves at a rate of just three to eight miles per hour along the pipe, meaning a trip from Houston could take 14 to 22 days, a long time to wait for relief supplies — especially if it is delayed by a lack of pumping power.

In addition to pipelines, gasoline can also be efficiently transported via the sea in a big gasoline tanker. Therefore, as an alternative, refineries with port access could theoretically circumvent the downed Colonial pipeline by shipping gasoline directly into New York Harbor. Unfortunately, government regulations kept that option off the table for days, exacerbating the fuel shortage.

MORE: What we didn’t miss in Hurricane Sandy: Mail

The regulation at issue, the Jones Act, prohibits the transfer of goods between U.S. ports unless the ship moving the cargo was 1) made in the U.S., 2) registered in the U.S., and 3) staffed by an all American crew. The economics of shipping gasoline under those restrictions makes the trip very expensive — double the price of a foreign sailing. In any case, even if the economics worked out, there are very few U.S.-made gasoline tankers, let alone U.S.-made tankers with all American crews onboard. So that means gasoline supplies backing up in Houston, due to the Colonial shutdown, is currently being loaded onto ships bound not for New York, where it is needed, but for South America and Europe.

Governor Cuomo announced Friday morning that the Federal government had waived the Jones Act provision, allowing for the transfer of gasoline via any ship to New York. That was welcome news, but it shouldn’t have taken a week for the government to get its act together. If ships filled with gasoline left Houston last Monday, the day Colonial suspended shipments to New York, then the gas would have been one week closer to the city, helping to alleviate the near-term supply crunch brought on by the power outage.

So with the temporary lifting of the Jones Act, the gasoline problem is solved, right? Well, not totally. Even with the transportation issue somewhat resolved, there is still a problem with the next link in the gasoline supply chain: storage and distribution. The storm knocked out power and damaged to a number of gasoline storage and loading terminals around the New York Area. Without these terminals, pipelines can’t offload gasoline into the storage drums, which is needed to feed gasoline trucks bound for nearby service stations.

MORE: 8 money-makers in Sandy’s wake

The damage to these facilities appears to be serious, according to clean product traders familiar with the situation. Motiva, a joint venture with Shell and Aramco, said that its storage facilities in Sewaren and Newark, New Jersey, and Brooklyn and Long Island, New York, are down with no restart date known. The damage could be serious as Motiva admitted that one of its tanks leaked 336,000 gallons of diesel fuel.  Even more troubling, IMTT’s mega 600-acre storage facility in Bayonne, NJ, which is partly owned by Macquarie, the Australian investment bank, took a major hit in the storm. The facility resumed operations this weekend at a limited capacity. The company is still surveying the damage but it could take weeks for the facility to get back to normal operations. Meanwhile, Kinder Morgan (KMI) says one of its massive storage tanks blew into another tank in its facility near Staten Island in Carteret, NJ, creating a crack in one of the tanks. Nonetheless, Kinder Morgan says it hopes to have its facility up and running soon.

Eventually, all the damage caused by Hurricane Sandy will be repaired. The storm knocked out power to a number of gasoline stations with full tanks, so bringing those stations online will be a big help in the short term. The government has finally stepped up and waived the Jones Act, but more needs to be done to power up terminals or else New York Harbor will just have a bunch of gasoline-filled ships roaming around with nowhere to dock. This is the second hurricane to hit New York in the last two years, so this may not be such a “freak” occurrence amid changing weather patterns. Both government and business should therefore do a better job of dealing with this issue come next year.

About the Author
By Cyrus Sanati
See full bioRight Arrow Button Icon
Add Fortune on Google for similar content.

Latest in

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • Pinterest icon

Latest in

MSCI delays Indonesia’s market status review until November
AsiaIndonesia
MSCI delays Indonesia’s market status review until November
By Prima Wirayani, Bernadette Toh and BloombergJune 23, 2026
4 hours ago
sb
Commentaryclimate change
The climate policy triangle: why leaders can no longer choose between growth, security and sustainability
By Sebastian BuckupJune 23, 2026
10 hours ago
Amazon Prime Day isn’t a midsummer shopping event anymore. Here’s what changed in 2026
RetailAmazon
Amazon Prime Day isn’t a midsummer shopping event anymore. Here’s what changed in 2026
By Vidhi Choudhary and Retail BrewJune 23, 2026
10 hours ago
The hidden cost of your AI rollout: burning out the high performers running it
Workplace Cultureburnout
The hidden cost of your AI rollout: burning out the high performers running it
By Mikaela Cohen and HR BrewJune 23, 2026
10 hours ago
Tom and Diane Peterman pose outside their home at Black Lake on Wednesday, April 29, 2026, in Grant Township, Mich.
EnvironmentNatural disasters
FEMA told these families they weren’t in a flood zone. Then ice came through the windows
By Tammy Webber, M.K. Wildeman and The Associated PressJune 23, 2026
10 hours ago
Olympic rings at the Tesero Cross-Country Skiing Stadium ahead of the Milano Cortina 2026 Winter Olympics on February 03, 2026 in Tesero, Italy.
North AmericaSports
After the Knicks and World Cup, New York is ready for another challenge: the Olympics
By The Associated PressJune 23, 2026
11 hours ago

Most Popular

After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup
Success
After forcing workers back to the office, Goldman Sachs and JPMorgan Chase are now letting their staff work remotely—but only for the World Cup
By Orianna Rosa RoyleJune 23, 2026
19 hours ago
Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock
Banking
Markets tumble worldwide as Fed resets expectations: $400 billion wiped off SpaceX stock
By Jim EdwardsJune 23, 2026
21 hours ago
Current price of oil as of June 23, 2026
Personal Finance
Current price of oil as of June 23, 2026
By Joseph HostetlerJune 23, 2026
18 hours ago
Meet the 2 men putting New York's $300 billion pension fund in play for the first time in 20 years
Investing
Meet the 2 men putting New York's $300 billion pension fund in play for the first time in 20 years
By Nick LichtenbergJune 22, 2026
2 days ago
Former U.S. Secret Service agent says bringing your authentic self to work stifles teamwork: 'You don’t get high performers, you get sloppiness'
Success
Former U.S. Secret Service agent says bringing your authentic self to work stifles teamwork: 'You don’t get high performers, you get sloppiness'
By Sydney LakeJune 21, 2026
3 days ago
Texas and Charlotte used to build huge McMansions—now they're copying the California design tricks they once mocked
Real Estate
Texas and Charlotte used to build huge McMansions—now they're copying the California design tricks they once mocked
By Sydney LakeJune 22, 2026
2 days ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.