The Sulfur Crisis of 2000

The Problem Prohibition against sale of fuel oil with content above 0.3% sulfur Shortage of compliant #2 fuel oil Available supply of high sulfur fuel

Broader Causes for Short Supply of Compliant Fuel Oil Reduction in output by OPEC and others Low inventories due to recent warm winters Rising gasoline prices

More Recent Supply Problems Disruption of supplies to large natural gas customers Recent cold weather Windy conditions preventing tanker lightering

Short-Term Responses Blending with available compliant stocks Use of diesel fuel with 0.05% sulfur limit Blending with diesel fuel

Possible Solution 170,000 barrels of noncompliant fuel available in New Haven and Bridgeport Department of Environmental Protection may issue waiver for noncompliant fuel Agency must declare an “emergency”

Contact with DEP Series of telephone calls between ICPA, Robinson & Cole, and DEP In order to secure waiver, needed to: Document causes of emergency Limit distribution Limit environmental impacts

The Crisis Deepens Dozens of empty delivery trucks are lining up at terminals Prime time television is reporting on elderly and others who may be going without heat

DEP Issues Waiver 48 hour waiver granted for 170,000 barrels identified, but first: Told hours earlier that waiver would be granted, but no one left to work fax machine Informed that brokers were going home, possibly delaying deliveries

Not Out of the Woods Yet . . . Negotiations over price Other terminals asked about the sale of other supplies of noncompliant fuel DEP offered to extend waiver, if requested

Aftermath of Shortage Department of Consumer Protection investigated price increases Office of the Attorney General submitted interrogatories to suppliers and wholesalers At the same time, federal DOE and SBA recognized cash flow needs of retailers

Options for Avoiding Another Crisis Identify a monitoring and response team Include wholesalers, retailers, industry representatives, legal counsel, regulators Monitor warning signs Crude oil prices and trends Available supplies Weather Supplies of other fuels

Options for Avoiding Another Crisis (con.) Work with agencies to develop a protocol for expediting waivers Use one or more of the warning signs as a trigger for contacting agencies Evaluate options for minimizing potential environmental impacts