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UPDATE 2-NY area fuel lines grow even as pipeline, ports reopen

David Sheppard and Jonathan Spicer
Friday, 2 Nov 2012 | 5:25 PM ET

* Key pipeline resumes some service, oil tankers discharge

* Gasoline lines snaked miles-deep, hours-long, in 1970s redux

* Traffic on Manhattan bridges, tunnels down 48 pct vs normal

* Majority of service stations without power or fuel

* US govt waives tanker restrictions, Cuomo eases harbor regs

NEW YORK, Nov 2 (Reuters) - The lines of New York area motorists scrambling for gasoline lengthened on Friday, as a third day of ``panic buying'' intensified and tempers flared even as pipelines and oil tankers resumed limited shipments.

The restoration of power to more than half the 8 million homes and businesses knocked out by Hurricane Sandy offered the best hope for boosting fuel supplies. Still, operations remained constrained across the complex New York Harbor network of storage tanks and pipelines. Two New Jersey refineries were still shut, with reports of severe damage at one.

Many service stations lacked the power to accept new fuel, even as tankers began to discharge millions of gallons of gasoline that had been stuck offshore since Sandy tore through the area. As many as three-quarters of the area's filling stations were shut, either because of lack of fuel or a lack of power, by one estimate.

New York City cab driver Mohammad Sultan parked his yellow taxi at Hess station on Coney Island Avenue at midnight on Thursday so he could be first in line when a rumored fuel shipment arrived at 6 a.m.

Three hours later, with 180 vehicles behind him, the pumps were still empty. The city's Taxi and Limousine Commission said 24 percent fewer cabs were on the road at 9 a.m. Friday morning than at the same time last week.

``Because of the gas problem, there are thousands of yellow cabs sitting around wasting time and money,'' Sultan said.

The lack of fuel -- and lack of electric power to pump it -- had a noticeable impact on morning travel in the dense New York City and New Jersey area four days after Sandy smashed into the U.S. Northeast. Traffic through the Lincoln Tunnel was down more than 50 percent, authorities said, despite closure of the Holland Tunnel to the south. Some taxi drivers and frustrated commuters said they chose to stay home rather search out scarce fuel.

Authorities scrambled to address the issue, but without power for pumps and oil tanks, the supply chain cannot work.

The U.S. government waived the Jones Act barring foreign-flagged vessels from carrying fuel between U.S. ports. This could boost supplies from the Gulf Coast to the Northeast.

Still, such tankers would not arrive for a week, and could not discharge their cargo without power.

New York Governor Andrew Cuomo said he would temporarily lift tax and registration requirements on tankers docking on the New York Harbor, which had just reopened to oil vessels. One ship carrying 2 million gallons of gasoline had docked overnight in Newburgh, 60 miles north of New York city.

The situation is wearing on New Yorkers. Juliana Smith, a full time student, spent 2-1/2 hours in line to fill two five-gallon containers on Friday, an hour more than Thursday.

``It's psychotic,'' she said. ``People are angry. We have no power. No heat. We need gas for the generator and our Ford Explorer which is a monster.''

PIPELINE RESUMES, FLOWS LIMITED

There are signs the situation could improve in the coming days as wholesale markets begin to work again.

Colonial Pipeline, a 5,500-mile (8,900-km) network that runs from the Gulf Coast refining center all the way up the eastern seaboard, said late on Thursday it had resumed fuel deliveries at its Linden facility in New Jersey and began sending deliveries to a nearby terminal.

``Linden operations are relying on portable generators, pending the resumption of commercial service,'' the company said.

Fuel barge shipments into New York Harbor will be allowed on Friday, the Coast Guard said, if they have a place to offload.

Still supplies remain constricted with two New Jersey refineries idle. The Phillips 66 Bayway refinery in New Jersey, the second-largest in the region, may be shut for weeks due to flood damage, a source familiar with operations said on Friday. The company has not given a timeline for restarting.

HEARD IT ON FACEBOOK

There was ``panic buying'' in the region, an executive from Hess Corp said on a conference call. The company has managed to resume sales at most of its own outlets, but estimates that as many as 80 percent of all service stations in the greater New York City area were without power or fuel.

Motoring group AAA said on Thursday that less than 40 percent of the stations it monitors in New York City and New Jersey were able to sell fuel.

Travel across the three main bridges and tunnels to Manhattan was down 47 percent from normal on Friday morning, acording to data from the Port Authority.

``This is in part due to the gasoline shortages. It's probably also due to people staying home today - they've really had to fight to get where they want to go over the past few days,'' said NY Department of Transportation spokesman Adam Levine.

Rumors circulated on social media about which sites had gas or were due to take a delivery.

``I heard it on Facebook,'' said Manuel Ortiz, 33. He was first in the line of more than 60 people waiting with red and orange gasoline canisters.

Two police officers placed a blue barrier in front of Ortiz, who said he had been waiting since 2 a.m.. A fist fight broke out earlier, he said, when one driver tried to cut in front of another.

``I just want the gas. I don't care how long I have to wait,'' said Ortiz, a delivery driver whose car was costing money by the day. ``The car is getting ticketed. I have to get gas.''