By Paige Anderson
ALEXANDRIA, Va.—For decades NACS and the convenience and fuel retailing industry have worked with government agencies and administrations during times of disaster—whether natural or manmade—to ensure our industry quickly responds to fuel supply and demand disruptions.
Unlike fuel disruptions caused by hurricanes and other natural disasters, the challenges fuel retailers are currently facing due to Colonial Pipeline shutdown are more about fuel transportation and the ability to move fuel to needed locations, rather than a production or refining issue. The industry is in a unique situation where it is transitioning from winter blends to summer blends of fuel, and consumer demand is increasing as Memorial Day weekend approaches and the summer driving season kicks off. To make matters more complicated, there is national labor shortage in the industry, including a deficit of truck drivers.
To address this major supply disruption in the fuels market, the Biden Administration is working with our industry and issued several waivers to help alleviate the issues caused by the shutdown. On May 11, EPA issued a reformulated gas (RFG) l waiver for the Mid-Atlantic which will allow conventional fuel to be sold in RFG areas in the District of Columbia, Maryland, Pennsylvania and Virginia to facilitate the supply of gasoline.
In 2005, NACS worked with Congress to give EPA the authority to waive certain fuel regulations affecting the motor fuel system in times of emergency. EPA’s use of these waivers has been critical to bringing the entire fuel supply chain into operation as quickly as possible in many situations, including during the pandemic last year and past hurricanes such as Hurricanes Sandy, Matthew, Harvey and Irma. Some of these waivers provided flexibility by allowing winter blend fuels to enter the market before the September 15 transition date or allowing leftover winter blends to be sold after the transition to summer blends of fuel on June 1.
In addition to EPA waivers, the Federal Motor Carrier Safety Administration (FMCSA) has the authority to waive truck driver hours of service and certain other operations requirements, which help transport fuel and supplies from long distances to needed areas more quickly.
On May 9, FMCSA issued a temporary hours of service exemption that applies to commercial drivers transporting gasoline, diesel, jet fuel and other refined petroleum products to Alabama, Arkansas, the District of Columbia, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia. FMCSA added West Virginia to the list on May 11. To address the national shortage of truck drivers, NACS and other industry trade groups asked the FMCSA to issue national waivers exempting truck drivers transporting fuel from hours-of-service rules. This waiver has played an important role during the Colonial pipeline shutdown to transport motor fuels.
Throughout the week we’ve been in constant contact with NACS members in the affected regions who are running low on fuel inventory or completely out. We continue to communicate with the Biden Administration, including FMCSA to issue a waiver for certain truck weight and size requirements. Given the truck driver shortage, this additional waiver would be necessary to help move product. Most of this authority resides at the state level, but FMCSA has been helpful in working with our industry and communicating our concerns with their counterparts in the most affected states.
In addition, we are working with EPA to grant a RVP waiver to allow those fuel marketers who still have or access to winter blends of fuel to be sold beyond the deadline to transition to summer blends of fuel. This waiver could also make it possible for some NACS members to blend butane into summer blends of fuel which could extend the supply of fuel.
There have been conversations about a Jones Act waiver. Jones Act waivers are rarely approved. The only basis for a Jones Act waiver is “interest of national defense;” however, in response to hurricanes Harvey, Irma and Maria, the U.S. Department of Homeland Security approved a seven-day Jones Act waiver in due to severe crude oil supply disruptions.
As of May 11, the Colonial Pipeline began manual operations of a line from North Carolina to Maryland, with the full pipeline possibly back online at the end of this week according to an announcement by Colonial Pipeline.
Meanwhile, the effects of the shutdown are showing at the pump. AAA says we’re on track to see the most expensive pump prices since November 2014, the last time average prices were $2.99 and higher. Spokesperson Jeanette McGee said higher gasoline prices could vary by region, with Mississippi, Tennessee and the East Coast from Georgia into Delaware experiencing limited fuel availability and price increases.
AAA also notes that once the pipeline is up and running, there could be residual delays because it takes about 15 to 18 days for fuel to flow from Texas to New York.
Jeff Lenard, NACS vice president for strategic industry initiatives, shared in NACS Daily that the liquid fuels distribution system is complex, and if any component of the system is disrupted, the supply challenges that arise take time to resolve before the market returns to normal.
We continue assisting convenience and fuel retailers with the necessary relief our industry needs so normal operations can resume as quickly as possible. Reach out to me so we can make sure your voice is heard while communicating with regulatory and administration officials at firstname.lastname@example.org.
Paige Anderson is the NACS director of government relations, specializing in fuels, energy, climate change, environment, transportation, patent reform, privacy, data and cyber security issues on behalf of NACS members.
As of this morning, several new actions have transpired to help our industry move supply:
- EPA extended the reformulated gas waiver to May 31 and expanded it to include nine additional states
- FMCSA is providing more flexibility in working with the states on waiving certain weight restrictions
- The Biden Administration will consider individual Jones Act waivers if they directly help address supply constraints