Fuel supplies, pricing a 'major concern,' LI petroleum company says

Northville Industries, one of Long Island’s major providers of petroleum products, on Monday expressed “major concerns” about fuel pricing and availability in coming months, after the Biden administration last week issued a warning of potential action to address unprecedented shortfalls.

Tom Magno, a director for Northville, in an interview with Newsday on Monday said, “There’s a real issue out there with supply and we worry about it every day.”

He noted that while prices for gasoline and heating oil may be off from their prior 2022 highs, prices have been rising recently. “It came down and then shot back up,” he said of the price of gasoline, reflecting the changing supply situation.

His concern was even greater for home heating oil, which according to the state has settled at $4.99 a gallon in the most recent survey for Long Island, down from a prior high of $6.46 a gallon in mid-May. The most recent $4.99 price is a 53% increase from the $3.26 reported a year ago.

“Here we are on the verge of heating oil season and we all have our fingers crossed it [the price] will come back down, but we’re not feeling it,” Magno said. “It’s a major concern of ours.”

John Catsimatidis, chairman and chief executive for the Red Apple Group, which owns United Refinery Co., another big regional supplier, said of the New York shortfall, "Yes, it's true," and adding, "It's going to force the prices up even though I predicted prices were coming down." 

Catsimatidis noted that a similar emergency declaration was declared in the Midwest, impacting Indiana, Wisconsin and Michigan, among other states. That shortfall was the result of the nation's fourth-largest refinery being shut down for past two weeks. 

The bigger problem, Catsimatidis said, is lack of domestic supply coupled with only marginal changes in foreign production, including from Saudi Arabia. He wasn't willing to predict how long a potential price increase would last. "We don't know," he said. "It depends on how short oil coming into the Northeast is." 

Andy Harris. chaiman of the board at Long Island Gasoline Retailers Association, said the problem hasn't been as pronounced at the retail pump, though he noted there have been "spot shortages." 

"Sunoco was out of product a little while ago," he said. "It takes a little while to get it back." 

He said he expects prices at the pump to rise, even as summer demand eases. "It's a little unusual, but the [Biden] administration has cut a lot of things back, and that's adding to the increases," including canceling oil pipelines, drilling and production.

But Bloomberg News on Friday reported the Biden administration warned refiners of government action to address exports. The shortfalls could result in “emergency measures, if refiners don’t limit exports to replenish domestic stockpiles,” Energy Secretary Jennifer Granholm wrote to top refiners last week, according to Bloomberg.

The situation is a concern for consumers as well. Retiree Ron Howard of Massapequa said he's been following the rising prices for months and worries about what it means as the heating season approaches. A former fuel-oil truck driver, he said he can't understand why fuel oil prices remain higher than gasoline. 

"It's like there's no control over this," he said. "It's just so unfair, especially now that winter time is coming." 

Magno said that with home heating season just months away, homes and businesses that can lock in pricing below $5 are lucky.

“Anybody who can get under $5 a gallon is a home run right now,” Magno said. “We don’t see anything getting better.”

Bloomberg reported that inventories of East Coast distillates, including diesel, are “languishing at their seasonal lowest levels ever, while gasoline stockpiles in the New York Harbor area emerged from historic lows only last week.

In the past, Russian supplies of fuel filled a critical gap in supply during the cold winter months, but that resource won’t be available this season and perhaps beyond because of U.S. sanctions following the Russian invasion of Ukraine.

Bloomberg reported the supply situation could be further exacerbated by summer storm season as it reaches its peak in coming weeks.

“Fuel supply on the East Coast is likely to remain precarious as Gulf Coast refineries begin scheduled maintenance in the fall,” Bloomberg reported. “Even when supply is abundant, a dearth of pipelines and tankers means Gulf Coast refiners have limited options for sending gasoline and diesel to eastern markets.”

Magno said, “We are watching it every day and it’s a big concern.”

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.