UPDATE 1-NY area fuel still scarce as pipeline, ports reopen

* Majority of service stations without power or fuel

* Supplies may improve as New York Harbor restrictions ease

NEW YORK, Nov 2 (Reuters) - The miles-long lines of New York area motorists scrambling for gasoline showed no signs of abating on Friday, with ``panic buying'' gripping the storm-hit area even as pipelines and oil tankers began to resume bulk shipments.

The lack of fuel -- and lack of 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. Roads were quieter with some taxi drivers and frustrated commuters choosing to stay home rather than brave the roads or search out scarce fuel.

There are some limited signs the situation will improve in the coming days as wholesale markets begin to work again, and authorities accelerated efforts to restore normal service.

A key pipeline delivering fuel into the storm-stricken New York area has resumed shipments and fuel barge shipments into New York Harbor will be allowed on Friday, the Coast Guard said, if they have a place to offload. The U.S. government waived a rule that bars foreign tankers from transiting U.S. ports, potentially easing supplies from the Gulf Coast.

Still supplies remain constricted with two major New Jersey refineries idle and key oil storage sites still without power, while thousands of service stations across the region are unable to serve drivers either due to a lack of gasoline or a lack of power.

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.

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 stations, but estimates that as many as 80 percent of all fuel 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.


At 9 a.m. EDT (1300 GMT) in Brooklyn, Mohammad Sultan's yellow taxi was the first of 180 vehicles queued for gasoline at a Hess station on Coney Island Avenue. He had been there since midnight.

There were rumors of a fresh fuel shipment at 6 a.m., and then again at 8 a.m., but no truck had come. Now people were hoping for a 10 a.m. delivery.

``I believe them,'' Sultan, 35, said through a lowered window.

``But because of the gas problem, there are thousands of yellow cabs sitting around wasting time and money. The garage will charge the lease on the car anyway.''

Adam Levine, a spokesman for the Department of Transportation in New York, said the number of cars on the roads had dropped on Friday.

``There's a lot less traffic on the roads today in New York. 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.''

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.''

The NYC Taxi and Limousine Commission said there were 24 percent less cabs on the road at 9 a.m. Friday morning than at the same time last week.


Efforts to alleviate the squeeze accelerated.

The Department of Homeland Security waived the Jones Act, which normally bars foreign flagged vessels from carrying fuel between U.S. ports, which may help improve supplies from the Gulf Coast to the Northeast.

Colonial Pipeline, a conduit that supplies about 15 percent of the East Coast's gasoline, diesel and jet fuel, said late on Thursday it had resumed 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.

The northern leg of the pipeline, a 5,500-mile (8,900-km) network that runs from the Gulf Coast refining center all the way up the eastern seaboard, had shut down on Monday ahead of Sandy.