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US waives Jones Act in preparations for Irma: Update

08 Sep 2017 21:15 (+01:00 GMT)
US waives Jones Act in preparations for Irma: Update

Adds details from Jones Act waiver

Washington, 8 September (Argus) — President Donald Trump's administration has waived restrictions under the Jones Act to increase fuel shipments into the southeast US, where Hurricane Irma is expected to exacerbate gasoline shortages.

US homeland security acting secretary Elaine Duke waived the domestic shipping restrictions yesterday for seven days. The waiver will allow refined petroleum products to be shipped on foreign-flagged vessels to Florida, Georgia, South Carolina and Puerto Rico, from ports in Texas, Louisiana, New York and Pennsylvania. Those deliveries would otherwise be prohibited under the Jones Act, which requires shipments between US ports to occur on US-flagged vessels.

"This is a precautionary measure to ensure we have enough fuel to support lifesaving efforts, respond to the storm and restore critical services and critical infrastructure operations in the wake of this potentially devastating storm," Duke said.

Irma is expected to make landfall in southern Florida on 10 September as a Category 4 storm. Tropical-storm force winds are forecast to reach the state by tomorrow, prompting port closures and evacuations from coastal areas that could be inundated by storm surges and rain.

Florida relies heavily on imported shipments of gasoline and other fuels because it does not have local refineries or pipelines that can bring refined products into the state. Florida police have been escorting tanker trucks to expedite deliveries to gas stations that are struggling to keep up with demand from evacuating residents and others filling up their tanks ahead of the storm.

Governor Rick Scott (R) has warned that impending port closures will prevent gasoline resupply until the storm passes. The port of Tampa is closing at 8pm ET. Port Everglades, along with the ports of Jacksonville and Savannah, are closing at midnight ET. Weather conditions will dictate how much fuel can be imported before Irma makes landfall, but there is not "too much more that we can get in," Trump's homeland security adviser Tom Bossert said.

The Jones Act waiver is the first to be issued since 2012, when damage from Hurricane Sandy prompted a waiver that allowed foreign-flagged tankers to transport petroleum products from the US Gulf to the northeast US. Duke said she was issuing the waiver in the interest of national defense, following recommendations from the US Defense Department and a concurrence from the US Energy Department.

ExxonMobil subsidiary SeaRiver Maritime on 2 September requested a month-long waiver of the Jones Act. The company said Jones Act tonnage is technically available but "in very tight supply" after Hurricane Harvey made landfall two weeks ago and disrupted operations of refineries, ports and pipelines in Texas and Louisiana.

"A 30-day waiver of the Jones Act will allow Sea River, and the industry as a whole, to supply affected regions with refined petroleum products and will assist in mitigating supply run-outs in the Texas and Florida markets," the company said in its request.

Phillips 66 separately requested a Jones Act waiver in the days after Harvey to supply crude to its 250,000 b/d Alliance refinery in Louisiana, but the request was more limited and Phillips 66 withdrew it before the agency made a decision.

"We now have Jones Act tonnage sufficient to meet the Alliance Refinery's supply needs," Phillips 66 said.

The Trump administration has been waiving other federal laws to ease hurricane-related fuel shortages. The US Transportation Department on 31 August suspended hours-of-service limits on truckers hauling fuel in 26 states. The US Environmental Protection Agency has waived low-volatility gasoline requirements in 38 states. Energy analysts expect more such actions are likely.

"The state and federal government is going to move heaven and Earth to make sure energy disruptions are as short as possible," Columbia University Center on Global Energy Policy fellow Bob McNally said.