1. The Sulfur Crisis of 2000

2. 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

3. 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

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

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

6. 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”

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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