President Joe Biden is mulling taking action to release federal diesel stockpiles in an attempt to curb the worsening supply shortage of the key fuel in New England, CNN reported Monday.
A senior Biden administration official told CNN that Biden recently asked officials to begin preparing a plan to order a release of fuel from the Northeast Home Heating Oil Reserve (NEHHOR), a government stockpile of ultra-low-sulfur diesel fuel. This reserve has not been called into use since 2012, during the Hurrican Sandy catastrophe. The move reportedly reflected the president’s and White House officials’ concerns about surging diesel prices and declining private sector inventories in the northeast.
The senior official also told CNN, “The system is definitely under strain. We think this looks like the exact circumstance where consideration of the release should be done and that’s what the president has directed.”
On Wednesday, last week, the average price of diesel fuel skyrocketed to an all-time high of $5.58 a gallon, according to AAA date. Diesel prices have been particularly high in New England where prices reached $6.43 a gallon on Wednesday, exceeded only by prices recorded in California.
Diesel inventories on the East Coast dipped to 21.3 million barrels in early May, the lowest level ever recorded, causing prices to surge. The region consumes roughly 1.53 million barrels of ultra-low-sulfur diesel per day, meaning current inventory levels translate to about 13 days of supply.
The entire NEHHOR contains slightly morel than a million barrels of ultra-low-sulfur diesel, or about 65 percent of East Coast daily demand.
Lipow Oil Associates President Andy Lipow told CNN, “It’s small potatoes. It might buy a couple of weeks or even months, but it doesn’t solve the underlying issues. “it’s a band-aid, one that isn’t going to last very long and when it comes off the injury is not healing.”
Biden’s historic release from the much larger Strategic Petroleum Reserve (SPR) have had a minimal effect on oil and gasoline prices. Gasoline prices have hit multiple record highs and oil prices have remained elevated in the aftermath of Biden’s 180-million-barrel release from the reserves in late March.
The recent SPR releases have also led to a dwindling of national oil stockpiles. SPR stocks fell to about 538 million barrels May 13, the lowest level since 1987, according to the latest government data.
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