US Declares Energy Emergency as Cold Snap Hits Northeast

By and

A woman stands in a street as the snow falls in the Manhattan borough of New York on Dec. 14. Photographer: Charly Triballeau/AFP/Getty Images

Get the Latest US Focused Energy News Delivered to You! It’s FREE:

Four northeastern US states are under emergency transport orders after an outage at one of the largest underground heating fuel storage facilities in the region threatened to disrupt deliveries during a severe cold snap.

The US Department of Transportation issued a declaration, effective Dec. 12, waiving regulations on how long drivers can be at the wheel without rest as they distribute propane to thousands of customers in New York, New Jersey, Delaware and Pennsylvania. The governors of New Jersey and Pennsylvania already had waived state-level trucking restrictions, a common response to regional issues affecting the transport of commodities.

The federal declaration will remain in effect until the end of the emergency or midnight Dec. 26. A prolonged disruption to heating fuel distribution could put pressure on prices, especially during peak winter demand months.

Source: US Energy Information Administration

The issue stems from a Nov. 19 electrical incident at a transformer at Energy Transfer LP’s Marcus Hook terminal in Pennsylvania. The outage disabled the facility’s ability to load propane on trucks for three days and led the company to declare force majeure, according to a statement from the National Propane Gas Association.

Energy Transfer customers were placed on allocation, meaning they could only collect a portion of their contracted purchases, and are receiving 70% of their loads, the association said. Energy Transfer didn’t respond to multiple requests for comment.

The terminal is loading propane onto trucks directly from a pipeline, causing wait times to increase. Normally, propane is distributed from Energy Transfer’s massive underground storage caverns around the clock and picked up by about 200 trucks per day. Access has been limited to 12 hours a day, Pennsylvania Propane Association Executive Director Shelby Bell said.

Most of the issues caused by the Marcus Hook terminal outage have affected propane being moved by truck, said Amy Strahan, liquefied petroleum gas and petrochemicals editor at Argus Media.

Propane that isn’t distributed locally flows south from northeastern states to Mont Belvieu, Texas, and into the higher-priced export market, regardless of season, Strahan said. “Although this is the worst time of year for this to occur, it has not translated into any meaningful drop in wholesale prices in the US Midwest,” she said.

The US Energy Information Administration on Monday revised its Winter Fuels Outlook and now expects a colder winter and higher fuel prices than originally estimated when first published in October.

The agency expects this winter to be as cold as the prior year, after previously forecasting a warmer one. It also now expects higher retails prices for natural gas and propane than previously forecast.

US refiners and gas plants produced 2.9 million barrels of propane and propylene daily in the week ended Dec. 5, according to the EIA. The country exported 2.1 million barrels of propane daily in the same week.

(Updates details throughout and adds analyst comment.)