Hurricane Sandy Aftermath

Why Hess Stations Recovered Faster From Sandy


Staten Island residents stand in line for fuel at a gas station

Photograph by John Moore/Getty Images

Staten Island residents stand in line for fuel at a gas station

In a scene straight out of the 1970s, and for the first time since then, New York City and parts of Long Island began rationing gasoline on Friday morning. Depending on how quickly the area’s energy infrastructure can return to normal, the restrictions could last for weeks.

Eleven days after Hurricane Sandy hit, most of the region’s gas stations are still unable to operate at full capacity, either because they lack electricity or they can’t get enough gasoline. Only 25 percent of New York City’s roughly 800 gas stations are open at a given time, according to Mayor Michael Bloomberg’s press office. But while competitors are starved for gasoline, Hess (HES) has emerged in much better shape. According to a company spokesperson, 98 percent of the 186 Hess gasoline stations are open in the New York/New Jersey metro area. “Of all the walking wounded, Hess has fared by far the best,” says Fadel Gheit, senior oil and gas analyst at Oppenheimer.

Unlike Exxon (XOM) or Sunoco (SXL) or ConocoPhillips (COP), Hess is based in New York with operations largely on the East Coast. In the wake of a storm that disrupted the East Coast’s complicated gasoline supply chain, Gheit credits Hess for having a better handle on its ground-game logistics. “They have a true home-court advantage,” says Gheit. “A lot of those other companies were unprepared and got caught with their pants down.” Hess bought 85 generators in advance of the storm to keep stations open in areas without power, according to a company spokesperson.

Hess’s refinery in Port Reading, N.J., is still not up and running. But more important, its storage depot there and loading rack for trucks are operating normally. This has allowed Hess trucks to continue making gasoline deliveries to its stations around the region, something a lot of competitors have been unable to do for the past week. “Hess has a huge amount of storage just outside of New York in New Jersey,” says Ben Brockwell, director of data and pricing at Oil Price Information Service (OPIS), a New Jersey-based energy research firm. “They have access to gasoline that can be delivered in a day or two.” On the other hand, Shell stations are supplied by Motiva Enterprise, whose terminals were severely damaged during Sandy and ended up leaking diesel fuel. Most of that gasoline, says Brockwell, has to come all the way from the Gulf Coast either by pipeline or by ship. Motiva didn’t respond to a request for comment.

The disruption caused by Sandy to the Northeast has led to an oversupply of gasoline along the Gulf Coast, resulting in sharp declines in prices over the past week in Georgia, South Carolina, and Louisiana, among other states. The average price for a gallon of gasoline in South Carolina is now $3.08, vs. $3.97 in New York state, where prices are now higher than in California. “That price differential should be a huge incentive to get as much product as possible into the Northeast,” says Brockwell. “That alone will help remedy the situation.”

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Philips is an associate editor for Bloomberg Businessweek in Washington. Follow him on Twitter @matthewaphilips.

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Companies Mentioned

  • HES
    (Hess Corp)
    • $69.03 USD
    • 2.80
    • 4.06%
  • XOM
    (Exxon Mobil Corp)
    • $89.02 USD
    • 2.61
    • 2.93%
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