After the Storms

November 30 marked the end of a truly historic and devastating 2017 hurricane season. From August through September, Hurricanes Harvey, Irma and Maria wreaked havoc on numerous U.S. and Caribbean communities. The end of the 2017 Atlantic hurricane season also couldn’t come quick enough for the country’s convenience and fuel retailers, which faced fuel outages, panic buying and mass evacuations, as well as dealing with stores or employees’ homes damaged or ruined by the storms.

The speed at which Hurricanes Harvey, Irma and Maria intensified and made landfall proved to bring significant challenges to the U.S. retail fuel supply and distribution system as well, with Harvey making landfall in Texas on August 25, Irma blasting Florida on September 10, and Maria hitting Puerto Rico on September 20.

Hurricane Harvey was the first major hurricane to hit the U.S. mainland since 2005, bringing historic levels of rainfall to Texas and Louisiana and causing massive flooding. As a result, 48 out of the 141 U.S. refineries (34%) along with major oil drilling and production sites in the Gulf, two major pipelines (Colonial and Explorer) serving the mid-Atlantic, Southeast and Midwest, and more than 18,968 convenience stores in Texas and Louisiana were directly impacted.

Just over a week later, Hurricane Irma hit Florida as a Category 5 hurricane. In anticipation of Hurricane Irma, the state issued mandatory evacuation orders, leading to a significant increase in demand for gasoline at a time when supply infrastructure was still coming back online. Florida is home to 9,930 convenience stores, with 6,639 of those stores selling gasoline. Hurricane Maria was the strongest hurricane to hit Puerto Rico in more than 80 years. The Category 4 storm caused massive destruction and knocked out 100% of the power across the entire island.

When Mother Nature Strikes

Convenience stores are in every state and community throughout the United States; those stores that sell fuel represent 80% of the motor fuels sold in the country. And because the U.S. fuel supply and distribution system is complex, major events such as hurricanes can disrupt the system across the entire country—not just the areas directly hit by a storm.

When most community residents are evacuating to safety, convenience stores typically remain in operation as long as they can without putting their own employees’ safety and well-being in harm’s way. Their focus is to see how long can they stay open before the storm, and how they can be first to open when it is safe to do so—all while ensuring that they have power and supply. This means making sure fuel, food and other necessities are available for emergency workers and customers seeking a return to normalcy.

There are added complications with staying open that go far beyond opening the doors. If a store doesn’t have power, for example, it’s not able to open. But even with power restored or supplied from emergency generators, a number of other critical elements need to be addressed. The biggest is usually how to get new fuel shipments.

Retailers must depend upon a smooth distribution process upstream, from clear, debris-free roads for fuel tankers delivering product to adequate power to sustain operations at terminals, pipelines, refineries and even ports where crude oil is delivered.

During times of strong, continuous demand, an average-sized fuel retailer may sell around 1,000 gallons of fuel an hour from underground storage tanks that usually hold 10,000 gallons. This means that even when a store has power and the distribution system has minimal disruptions, a retailer still may only have a few hours to receive a new shipment and stay in business. Additionally, that fuel shipment may be hundreds of miles from the station because the United States has a regional imbalance between where fuel is produced and where fuel demand is the highest.

While the recent hurricanes affected different parts of the fuels market, communication, collaboration and cooperation between emergency response agencies at the state, local and federal level of government as well as among industry stakeholders proved critical to effectively implementing preparedness and response plans and assisted recovery efforts.

Hurricane Harvey

The Texas Gulf Coast picks itself up after disaster strikes.

On Friday evening, August 25, Hurricane Harvey, a category 4 hurricane with 130 mph winds, made landfall near Rockport, Texas, southwest of Houston, and spent the next six days dropping an estimated 27 trillion gallons of rain over the Texas Coastal Bend and parts of Louisiana, according to Weatherbell, a weather analytics company.

The storm packed powerful winds, storm surges and caused catastrophic flooding. By the time Harvey fizzled out, at least 82 fatalities had been attributed to the storm, more than 30,000 people were forced from their homes into temporary shelters and 200,000-plus houses had suffered flood damage.

By early September, approximately one million auto claims had been filed on cars and trucks, both private vehicles and those sitting on dealers’ lots. Authorities predict that three-quarters of that number will be totaled.

In Houston alone, mountains of trash, estimated at more than 8 million cubic yards of soggy drywall, furniture, clothing and flooring, needed to be removed and disposed of, and sanitation trucks from as far away as Dallas were sent to help clean up.

Thousands of businesses closed, including many convenience stores. One major retailer, Couche-Tard, was forced to temporarily close 120 of its 700 Texas stores due to flooding.

Jesus Azanza, director of communications and marketing for the Texas Food and Fuel Association (TFFA) in Austin, visited the area two weeks after the hurricane passed. “One thing that will stick with me is the overwhelming smell of mold,” he said. “The smell was very intense.”

Out of Gas?

Harvey’s impact extended far beyond the confines of Greater Houston. With the hurricane’s arrival, Gulf Coast-area refineries began closing, and by Wednesday, August 30, an estimated 20% of the nation's refining capacity had shut down. Efforts to deliver available fuel were hampered due to hurricane-damaged fuel trucks and roads.

Soon, radio and TV news stations were predicting major fuel outages, and in the Dallas-Fort Worth area, panicked drivers waited hours in long lines just to top off their tanks.

“Ever since the media triggered the panic in Dallas, it’s been hectic,” said Bill Douglass, CEO at Douglass Distributing Company, at the time of the fuel rush. “Drivers followed our [fuel] truck into stores in Denton [north of Dallas] and then they’d fight over who was first in line. It got a little sticky.”

“Ten times the normal amount of drivers rushed to their local gas station to fill up every car and gas can in sight—within a span of 36 to 48 hours,” reported Azanza. “The panic-buying frenzy placed an incredible strain on Texas’ fuel distribution system and threw the demand-to-supply ratio completely off balance.”

A staff member worked directly with state officials in a bunker 50 feet beneath the capitol building in Austin as part of the state’s ‘fuel team.’”

Many North Texas stations ran out of gasoline, and retailers wrapped “caution tape” around fuel dispensers or changed their fuel price sign to “0.00” to let drivers know that supplies were depleted.

To relieve the public’s fears, TFFA used the news media, social media, email and other communications tools to share information about the status of fuel supplies and updates on refineries as they came back online.

Bradley Haile, co-owner of the four-store Rangler’s chain in central Texas, credited his fuel distributor for keeping his stores operating during the shortage. “We had a big rush on fuel,” he said. “Our phone was blowing up with travelers calling to be sure they could buy gas and get where they were going.”

Fortunately, the scare didn’t impact sales inside of his stores. “If gas prices had shot to $3 a gallon, maybe,” he said. “But they didn’t go up a whole lot.”

From August 23 through September 4, wholesale fuel prices shot up 21.1% and retail prices increased 12.7%. Similar metrics occurred the last time a major hurricane hit the U.S. mainland, but within three weeks, drivers in the South and Southwest saw prices fall.

Coordinating Efforts

Leading up to and after Hurricane Harvey hit Texas, Governor Greg Abbott held regular conference calls with the state’s retail fueling industry, state associations, emergency agencies and others who were directly impacted or who could provide assistance to the response efforts, noted Azanza.

A TFFA staff member worked directly with state officials in a bunker located 50 feet beneath the Capitol building in Austin as part of the state’s “fuel team,” and worked closely with Suncoast Resources, the state’s contracted emergency fuel responder.

On behalf of its members and Texas residents, TFFA:

• Conducted dozens of interviews with local and national news outlets on fuel supply
• Posted more than 100 updates on Hurricane Harvey on their website
• Sent over 30 emails to members and the media
• Fielded calls from concerned Texans, lawmakers and other associations regarding gas shortages and expected resupply dates
• Had four staff working around the clock for a two-week period before, during and after Harvey made landfall
• Identified terminals on a map and communicated to fuel marketers across the state to help coordinate potential sites to load fuel
• Put retail members in touch with national news outlets so they could tell their story of what their business, customers and employees were facing in their regions

A Helping Hand

Beginning with Hurricane Harvey, convenience retailers and other industry stakeholders were quick to offer support for relief and recovery efforts in the communities affected most by the storms:

Rutter’s of York, Pennsylvania, sent bottles of water, chips and personal care products to the disaster area and shared ways for customers to help. Through October 1, Rutter’s donated 10 cents of every cup of coffee sold to the American Red Cross, in addition to giving a $10,000 check to the organization. Stores also placed collection canisters at checkout.

Couche-Tard of Laval, Canada, announced a $100,000 donation to the Red Cross and accepted cash donations at its 9,500 North American outlets. The company also set up a $150,000 fund to assist employees impacted by Hurricane Harvey.

In addition to in-store collections and making a $150,000 donation to the Red Cross, the 7-Eleven Store Support Center in Irving, Texas, delivered hundreds of care packages and thousands of bottles of water to hurricane victims.

Sheetz donated $150,000 to hurricane disaster relief efforts. Funds donated by Sheetz customers were accompanied by a lump sum donation by Sheetz. A portion of the match donation was designated for Hurricane Maria relief in Puerto Rico. Sheetz's 560 stores across Pennsylvania, North Carolina, Maryland, Ohio, Virginia and West Virginia accepted donations at checkout for the victims of the recent hurricanes from September 7-30.

Casey’s General Stores and its customers donated more than $336,000 to help those affected by the hurricanes. This included a company match for the first $100,000 raised. Funds were provided to the American Red Cross at a presentation held at Casey’s in Ankeny on October 12.

Cumberland Farms’ fundraiser to support communities affected by Hurricane Harvey and Hurricane Irma raised more than $56,000 for the American Red Cross. During the fundraiser, which ran from September 18-24, 10 cents from every fountain or frozen Chill Zone beverage purchased at Cumberland Farms' nearly 600 retail locations was donated directly to the American Red Cross.

Love's Travel Stops of Oklahoma City donated $1 million, including $500,000 to the United Way Harvey Recovery Fund and $500,000 to help employees through the Love's Employee Emergency Fund.

Wayne Fueling Systems of Austin announced a dispenser replacement program to help stations replace equipment ruined by Hurricane Harvey.
San Francisco-based Core-Mark Holding Co. used its extensive supply chain to deliver necessities to first responders and created a relief fund for affected employees in the Gulf Coast area. First Data sent thousands of free Clover Go mobile credit and debit card readers to help Houston businesses get back in business.

Even Texas food truck operators helped, with many turning their rolling restaurants into emergency diners. One of the most prolific providers was James Canter of Victoria, Texas. The owner of the Guerilla Gourmet food truck, Canter was one of the few people with both electricity and water in a seven-county area. He organized several hundred volunteers, who cooked up huge pots of kimchee chicken stew and distributed bowls to more than 11,000 hungry people. When he ran out of food supplies, his pantry was replenished by residents who brought him foods to cook from their non-
operating refrigerators.

The Greater Houston Retailers Cooperative Association (GHRA), which supports independently owned and operated convenience stores, kept members updated on relief and assistance efforts for both their homes and businesses.

The GHRA Warehouse and Distribution Center also provided supplies to first responders, including emergency personnel working long shifts at a city convention center that was housing storm refugees.

“For some independent convenience store owners around Houston, it will take several weeks to repair their businesses and re-open,” said Mike Thompson, CEO of GHRA. “Some will have to deal with similar damage to their homes before they are able to move back in.

“It is very difficult to see so many of our members experiencing the hardships that come with a storm of this magnitude,” he said. “However, through all of these challenges, it was inspiring to see our members that were able, stand tall and help everyone around them. I have heard and seen many instances of our store owners providing essential goods and services during and after the storm.”

Hurricane Irma

The petroleum industry came together to move fuel supply throughout Florida.

In late August, as Gulf states were moving forward with Hurricane Harvey recovery efforts, another monster hurricane was quickly moving through the Caribbean and toward Florida. 

Hurricane Irma began as a tropical wave off the coast of Africa, per Weather.com, and became a tropical storm on August 30. Irma underwent a period of rapid intensification, growing to a Category 3 storm by August 31. The storm wreaked havoc on portions of the Caribbean, bringing tremendous damage as a Category 5 hurricane. Irma soon made two landfalls in Florida on September 10: Key West and near Marco Island.

As Irma’s path moved through Florida, high winds, storm surges and flooding ripped through communities. The metro area of Jacksonville experienced severe flooding on Monday, September 11. At Irma’s peak, the storm clocked wind speeds of 185 mph or greater, making it one of five hurricanes in recorded history to reach that level of maximum sustained wind speeds.

From the time Irma began forming off Africa’s coastline, the Florida Petroleum Marketers and Convenience Store Association (FPMA) began preparing for the “worst-case scenario” should the storm reach the state—and for good reason. Florida is the third most populous state with 20.6 million residents, and roughly 6.5 million of them evacuated prior to Irma’s landfall on September 10, in a state where residents can only exit in one of two directions—and South was out of the question.

Preparing for the Worst

As Irma headed toward Florida and state and local officials issued mandatory evacuation orders, the convenience industry could foresee that there would be increased demand for fuel. Florida is unique in that it does not receive fuel via pipeline; the state relies on trucks, tankers and barges.

Preparing for Irma, said Ned Bowman, FPMA’s executive director, required a communication plan to make sure all members the association represents, which include owners/operators of retail sites such as truck stops, retail motor fuel facilities or c-stores, suppliers and petroleum marketers, received the same data, information and response guidelines. “We needed to make sure everyone was on the same page,” he said.

James Miller, communications director at FPMA, added that the association and its members were preparing for Irma long before they knew the storm would hit Florida. When it was clear Irma’s path was heading toward the state, FPMA leadership was already embedded with state emergency management officials to determine the best course of action. Plans were being made not only for the 6 million residents evacuating Florida, but also for their return 72 hours later.

Industry alignment was also heightened by the dedication and work of Florida Governor Rick Scott, who not only understood the severity of the situation but relied on the Florida petroleum industry to help refuel the entire state—twice. “He took the helm of the situation—he did everything he needed to do,” said Bowman.

Max McBrayer, chief supply officer and chief financial officer of Atlanta, Georgia-based RaceTrac Petroleum Inc., told members of Congress during his November 2 remarks at a congressional hearing on hurricane emergency response and recovery efforts, that Scott and his administration “deserve special recognition for their close engagement with a wide range of stakeholders in the fuel supply system” during Irma.

“Governor Scott led daily, and sometimes twice daily, conference calls that included federal disaster response officials, convenience and fuel retailers (including NACS, FPMA and individual companies), oil companies, terminal operators and other segments of the supply chain before, during and after the storm,” McBrayer said.

“The governor’s office listened closely to industry concerns and rendered prompt assistance,” he continued. “To help retail locations stay open as long as possible, the governor arranged for state police to help employees who stayed on the job until the last minute get to evacuation centers with their families.”

McBrayer continued that the governor’s office, in working with federal and local officials, helped the industry and Florida residents by:

• Rescinding weight and driver restrictions for highways
• Helping to ensure that ports prioritized fuel shipments
• Coordinating police and military escorts for fuel trucks and ships, easing the movement of product from tankers and barges, through ports and terminals, to retail fuel locations, and ultimately consumers’ gas tanks

“Our industry moved mountains,” said Bowman of the industry’s efforts to refuel and resupply the entire state of Florida during the evacuation and the reentry. “It climbed Mt. Everest twice.”

Process of Improvement

While many actions and plans by the industry went extremely well before, during and after Hurricane Irma left Florida, hindsight is always 20/20 on what could be improved should another “Irma” move across the state.

Although fuel outages occurred at retail locations—per GasBuddy, 30% to 40% of stations experienced shortages—the broader issue was moving supply that was available to evacuation routes. FPMA believes it can help identify up-to-the-minute power and fuel supply issues through its contacts with local members and in the future can even more efficiently disseminate that information to state emergency response personnel.

To keep fuel supply moving throughout the state, both FMPA and the Texas Food & Fuel Association (TFFA) agree that there’s room for improvement for trucks to load at terminals. For example: Develop a strategy for increasing the number of loading racks at terminals and develop a strategy for constructing petroleum distribution centers to avoid bottlenecking at the rack.

In Texas, TFFA said that many fuel marketers were waiting to 10 hours to refuel, and in some instances, they did not receive a load. In the wake of Hurricane Harvey, within a 24-hour period, wait times at racks went from 4 hours to 10 hours.

McBrayer told members of Congress that bottlenecking at ports and fuel terminals was a recurring theme during this year’s hurricane season, adding that the federal and state governments could do more to help alleviate the problem during future natural disasters. He told members of the House Energy and Commerce Committee the government could help by considering “a legislative solution that would grant truck drivers and other employees critical to fuel delivery some kind of temporary ‘responder’ status that would relax port authority access restrictions to allow nonlocal truck drivers temporary access to ports in affected areas in emergency situations.”

10 Years Since Katrina

While there’s an urge to compare storms of the past with the ones that recently took place, the reality is that every storm is different, bringing its own unique set of challenges and lessons to learn. However, there are some undeniable differences between more recent storms and the storms that took place 10 years ago.

On Capitol Hill, McBrayer noted to members of Congress that the many successes of the 2017 hurricane response efforts “stand in stark contrast to what occurred during Hurricanes Katrina and Rita in 2005, when fuel supply and disruptions led to chaos in the marketplace.”

The industry’s response and recovery efforts in 2017 had a more substantial and sustained impact on U.S. refining capacity and the two major pipelines—Explorer and Colonial—compared to the 2005 hurricane season, added McBrayer. Despite the major disruptions to the fuel distribution system after Hurricanes Harvey and Irma, “the impact on consumers and the economy were significantly less than in 2005 because the government behaved much differently,” he said.

Following Katrina, McBrayer said the government confiscated or commandeered distribution equipment to respond to the emergency. This year, however, the public and private sector worked together to respond to the crisis. “From this experience, we have learned that communication and collaboration are the keys to success,” he said.

Another clear difference this year is that unlike previous storms, where governments dictated response efforts, the governors of both Texas and Florida worked with the industry to keep the lines of communication open, conducting regular conference calls and working together to solve issues. “They asked the private sector what to do and when; and there was real-time cooperation to respond to an ever-changing threat landscape. Such cooperation is unique—and it is commendable,” McBrayer said.

Hurricane Maria

Puerto Rico continues its daunting and frustrating process of turning the power back on.

Hurricane Maria completed the proverbial trifecta of the late summer Atlantic hurricanes on September 20, ripping through the Caribbean and decimating Puerto Rico. Even at this writing, the island continues to face a humanitarian crisis, as most of the island remains without power and basic services.

After being hit by both Hurricanes Irma and Maria in less than two weeks, Puerto Rico’s aged and inefficient power grid faltered under the force of Maria’s 155 mile per hour winds. Forty days after Maria, only about 30% of Puerto Rico’s power grid had been restored.

“This is truly a total disaster,” Manuel Reyes, executive vice president of the Puerto Rico Chamber for the Marketing and Distribution of the Food Industry, communicated to NACS in late September. “Right now, the main problem is diesel distribution. Retailers have no electricity and operate with generators, but without diesel they can’t. Neither can suppliers. The food will go bad and people are getting desperate. The government doesn't seem to have the ability to handle all that is going on and comprehend the need to establish difficult priorities.”

During the November 2 House Energy and Commerce Committee hearing, Ramon-Luis Nieves Esq., a former state senator of Puerto Rico, painted a picture for members of Congress that highlighted current conditions: “Puerto Rico is suffering from the longest blackout in U.S. history. As a resident of San Juan, I have personally suffered the problems associated with the lack of electricity for more than 40 days. The current energy crisis is destroying our economy and our way of life. Our friends and families are emigrating by the thousands. The government estimates that close to 15% of our population will emigrate as a consequence of Hurricane Maria and the subsequent lack of energy.”

Nieves also shared the inadequacies of the Puerto Rico Electric Power Authority (PREPA), noting that before Maria made landfall, PREPA “was already a bankrupt, fragile and useless entity. The power authority’s grid was obsolete, lacking adequate maintenance. For years, consumers and businesses have suffered from high energy costs, unreliability and constant interruptions.”

In the wake of Maria, Puerto Rico Governor Ricardo Rosselló asked Florida Governor Rick Scott to visit the island and help coordinate response and recovery efforts. As of this writing, the Florida government continues to deploy resources to the island. Specifically, the State Emergency Response Team and fuel industry partners have helped secure ships transporting fuel, fuel trucks and bilingual drivers to transport fuel to areas with the most critical need.

Rosselló also reached out to New York for assistance. On November 2, he and Governor Andrew Cuomo met with representatives of the Rockefeller

Foundation, Ford Foundation and Open Society Foundations and announced an immediate effort to help Puerto Rico better assess storm damage and secure federal disaster aid.

Cuomo also announced the deployment of emergency utility crews to Puerto Rico, including 350 utility personnel and 220 bucket trucks and special equipment. New York also deployed a Tactical Power Restoration Team to Puerto Rico, including 28 engineers and 15 damage assessment experts to help supervise and coordinate the restoration of the electric distribution system in the 27 sections of the PREPA power grid.

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