Homeland Security Watch

News and analysis of critical issues in homeland security

November 4, 2012

Supply and Demand in Disasters

Above: Truck rack for loading product to tanker truck

The fuel crisis in New York City, Westchester County, Long Island, northern New Jersey, and nearby is important.  Obviously it is important to the residents of these areas.  Less obviously, it is important to those of us who are involved in homeland security policy and strategy.

I have continued to aggregate fuel-related stories to the Friday post below.

In Sandy’s wake supply has not met demand.  Not unreasonably, policy makers and strategists have viewed this as a lack of supply.  Significant steps have been taken to increase supply.   Senator Schumer pushed the US Coast Guard to reopen the ports of New York and New Jersey to fuel deliveries.  Secretary Napolitano waived the Jones Act which allows foreign shipping to deliver fuel into the ports.  President Obama ordered the military to deliver fuel into the hardest hit areas.

All of these steps have increased supply to the mid-Atlantic and served to suppress price increases.   Many far removed from the New York metro area are benefiting from gasoline price reductions related to these steps to increase supply.  It has been a vigorous response.

It is not, however, targeted at the present problem.  Supply itself was never the problem. There are two fundamental problems:

The fuel distribution terminals have been damaged and have not had electricity. South and east of Newark Airport and just west and north of Staten Island is a handful of places where pipelines and tankers deliver gasoline (Google Map).  All of these venues lost power.  None of these venues were on the utility’s priority restoration lists.  The utility — and most policy-makers and strategists — did not know the role nor even the existence of these places.   This is where tanker trucks pull into truck racks and gasoline is pumped from storage tanks and blended into tanker trucks which then proceed to various gas stations.   There has been no electricity to operate the truck racks and that’s a fundamental problem.  There are other problems with debris removal, personnel,  damage to the storage tanks, and communications as to which gas stations have power, but these problems have not been the most serious impediments.

Two-thirds (or more) of gas stations have not had electricity to run their pumps and otherwise transact business. Many gas stations  have plenty of gasoline, but do not have electricity to pump that gas.   Why, you might ask, do gas stations not have back-up generators to pump their gas?  This is required in Florida and, maybe (?), Louisiana.  It has been successfully resisted in most other jurisdictions partly because  it would further diminish the number of independent operators and enhance the market dominance of chains.   Most gas stations would lose money on gasoline sales alone and make their (very small) profits on selling salty and sugary snacks, soda pop, beer, and cigarettes.  The capital and personnel requirements for purchasing and safely maintaining a generator for conducting sustainable commerce — not just pumping gas — are significant especially for the smaller independent operator.

There are a range of policy and strategy options to address these fundamental problems.  In the next two weeks is the right time for New Jersey, New York, Connecticut, and others to actively and inclusively consider these options.

It is also my impression — but I don’t have sufficient evidence to prove — that from Tuesday morning to Thursday afternoon/evening, these fundamentals were not being communicated to Governors Christie and Cuomo, Mayor Bloomberg, and other senior policy makers and strategists.  As a result, considerable energy, time, and effort were being expended on measures that were peripheral to the current problem and may have distracted from resolving the truck rack problem identified above.  This, too, is an issue worth considering while memories are fresh and more accurate after-action outcomes can be specified.

To be explicit:  There is absolutely no evidence of anyone being negligent or passive (quite the contrary).  There is evidence that a crisis, as usual, has exposed aspects of reality that now deserve sustained and thoughtful attention.

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5 Comments »

Comment by William R. Cumming

November 4, 2012 @ 12:59 pm

HISTORY LESSON 2012-11-4!

It should be no surprise that the oil and gas industry in the USA is far better represented in the Congress than the consumer of these products. The representation is so wide and deep that many foreign governments long ago gave up on the USA regulating this industry. The first but not last was the government of Saudi Arabia. Now, today, over 90% of proven oil reserves are held by NOCs. National Oil Companies life ARAMACO!
What few Americans understand is the federal government is prohibited from even gathering basic needed statistical information on the oil and gas industry.
The EIA [Energy Information Agency] of DoE largely relies on trade associations for their statistical data.
Alarmed at the lack of oversight by the Executive Branch the Congress slipped through a mandate for the OLC of DoJ to produce a detailed opinion on the authority of the President and all Governors to regulation including priortizing and allocating supplies to the consumer–essentially rationing. That opinion published by OLC in 1982 revealed that most Governors had broader authority than the President in energy emergencies. That conclusion largely remains unchanged and my informal requests to DoE and DoJ to update that opinion when a civil servant were ignored.
Of course 30 years later that comprehensive opinion should be updated as a starting point.
The use of the Defense Production Act of 1950 was utlized by the Acting DoE General Counsel to foil ENRON and should be reviewed for being utilized now or amended appropriately!

Comment by Philip J. Palin

November 4, 2012 @ 7:36 pm

Bill, I will note that the role and location of the fuel terminals had been previously well-documented. It took me a bit to find the NYC metro venues because this is not “my” region. But I knew what to look for and where to look. History and unfolding reality are very “present”, but we have to be willing to look and see, and “he that hath ears, let him hear.”

Comment by Alan Wolfe

November 5, 2012 @ 8:11 am

So let’s talk about resiliency… Instead of wringing our hands about the imminent threat of an EMP pulse taking out our electronic infrastructure, we see that it’s much easier to cripple a city by knocking out the gas distribution network. It seems like a good time for DHS to focus on resiliency from natural disasters, perhaps giving grants to states to get those generators at gas stations, instead of billions for CBRN terrorism response to incidents that quite frankly aren’t going to happen.

Comment by Donald Quixote

November 6, 2012 @ 10:42 am

Why must it require a grant for the public or private sector to prepare for almost anything? Why not permit businesses to increase their prices during an incident or post incident to a reasonable amount to recoup their operating costs and encourage their preparedness? Why in the world would someone prepare if the services and benefits will arrive anyway, although late and often inadequate, for free?

The EMP attack does not concern me as much as the well placed SCADA and node attack. As the recent posts demonstrate, we do not function terribly well without our all too fragile critical infrastructure operating at the margins that greatly depends on electricity. On the other side of the coin, why prepare when you can complain and be later well or poorly compensated? DHS is not the answer – the people are.

Pingback by Homeland Security Watch » Learning from Sandy

November 29, 2012 @ 5:52 am

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