Biden officials eyeing diesel stockpile to ease shortage
The Biden administration is in talks to tap to into a federal diesel reserve to address energy shortfalls, an official with knowledge of the matter confirmed to The Hill on Monday.
An interagency team of officials has been monitoring East Coast diesel supplies and developing policy recommendations to address them, the official said.
“The team has prepared emergency declarations for President authorize release from the Northeast Home Heating Oil Reserve if conditions deteriorate,” they added. “We would call this a bridge to deal with short-term supply shortfalls.”
The Northeast Home Heating Oil Reserve, created in 2000, is a Northeast-based stockpile of about 1 million barrels of home heating oil. Due to its relatively small size, the reserve is considered to be of limited long-term use, about a day’s worth of supply for the region, according to the White House. It has only been tapped once before, in 2012, after Superstorm Sandy battered the East Coast.
The White House official framed the crunch as a consequence of Russia’s invasion of Ukraine, a frequent refrain from the Biden administration as the war has thrown global energy markets into disarray.
“In recent weeks, the team noted a worrisome decline in diesel inventories in the Northeast (below 20M barrels), as well as on-the-ground reports of supply issues, resulting from a lack of supply in part resulting from Putin’s actions in Ukraine and the disruption in the energy market,” the official said.
CNN first reported that Biden administration officials were exploring the reserve to ease rising diesel prices.
Although the stockpile is likely too small to significantly reduce prices, the official said it could be useful in averting disruptive spot outages. While the White House said diesel prices appear to be stabilizing, it is concerned about the potential effects of shortfalls heading into hurricane season and winter.
Diesel prices hit a record average high of $5.58 per gallon last Wednesday, according to AAA. As of Tuesday, the average was down slightly to $5.55.
The spikes have been even more extreme in the Northeast, which has fewer refineries. New England had an average price of $6.43 per gallon as of last Wednesday, according to data from the U.S. Energy Information Administration.