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US in Jones Act waiver
The US Department of Homeland Security has temporarily suspended Jones Act restrictions in response to fuel shortages caused by Hurricane Sandy.
Janet Napolitano on Friday said the blanket waiver will “immediately allow additional oil tankers coming from the Gulf of Mexico” to enter ports located in the Northeast US through 13 November.
“The Administration's highest priority is ensuring the health and safety of those impacted by Hurricane Sandy and this waiver will remove a potential obstacle to bringing additional fuel to the storm damaged region,” the agency's Secretary explained in a statement.
Rates for medium-range product carriers trading in the Atlantic Basin have already soared on the back of what media reports are now calling Superstorm Sandy and ICAP Shipping says today’s development has set the stage for an equally exciting surge in the days to come.
Seven leading Northeast refineries, including those controlled by Philips 66 and Hess Corp, remain shut or are running at reduced capacity in the wake of the deadly storm due to damage caused by flooding, downed trees and power outages that continue to impact millions across the region.
The US Coast Guard has reopened ports from Philadelphia to North Carolina though traffic is restricted due to shoaling and floating debris. In New York and New Jersey fuel barge and tug traffic is open but deep draft vessels are only allowed entrance on a “case-by-case basis”, the agency said.
In Greater New York, petrol stations that still have power have been bombarded by customers looking to fuel up cars, chainsaws and home generators. Many have been emptied while others are instituting 10-gallon limits while grappling with queues that, in some cases, span half a mile (0.8 kilometres) or more.
Police have posted up at many filling stations including one located outside TradeWinds’ Stamford, Connecticut office where a cashier cited waiting times of over an hour and cautioned his tanks are running low amid concerns that deliveries aren’t due until Saturday afternoon.
While the Jones Act waiver is temporary observers say the order will likely anger some US shipowners and advocates in Washington who have in the past cried foul over alleged violations and lax oversight of a law that requires coastwise cargoships to be US built, crewed and owned.
The development caught the attention of Michael Webber, an equity analyst at Wells Fargo Securities, who issued a flash note to clients late Friday afternoon in which he mentioned talk that Exxon was the first and only company to request a waiver thus far.
"We note that the Jones Act tanker fleet is essentially fully employed at present, and we do not expect the waiver to have a material impact on the market particularly given the relatively short duration," he added.
"Likewise, while it may provide several extra cargoes to international product tankers we expect the overall impact to be relatively minor there as well given the relatively short voyage distance and the duration of the waiver."