The Department of Energy is offering to loan up to nearly a third of the 1-million-barrel US emergency heating oil reserve. The move aims to tame prices that have surged on diesel shortages. Senators from both parties had pushed for a release.
The Trump administration is offering to loan up to nearly a third of the 1-million-barrel US emergency heating oil reserve, the Department of Energy said on Wednesday. The goal is to tame prices, which have surged on diesel shortages due to the wars in Iran and Ukraine.
Diesel records push senators to act
Senators from both political parties urged the administration to release heating oil after diesel hit records above $6.50 per gallon on disruptions across the Middle East caused by the Iran war. Diesel comes from the same refining stream as heating oil.
The department will loan up to 315,000 barrels of heating oil from Maine, Massachusetts and Connecticut, with deliveries set to be completed by November 13. A competitive bidding process will cover loans for both fuel retailers and terminal holders, so the fuel can flow into areas facing shortages.
US Energy Secretary Chris Wright said the administration was "committed to doing everything in our power to lower energy costs." A source at the department said the administration will evaluate whether further releases are necessary.
Political stakes ahead of November 3
The US has tapped the Northeast Home Heating Oil Reserve only once since Hurricane Sandy struck the region in 2012. About one-third of New England homes use heating oil, and about half in Maine.
Soaring heating oil costs have emerged as a key issue ahead of the November 3 elections, including in several tight Senate races. Republicans are trying to maintain control of the two chambers of Congress.
Pipeline backing and crude loans
The administration is also backing the Williams Companies' Constitution natural gas pipeline project, which would ship gas produced in Pennsylvania to heat homes in New York and New England. This week, the US released up to $42 million in Defense Production Act funding for initial work, while New York has blocked the project on environmental grounds.
The administration is also struggling to control crude oil prices that have risen from the Iran war. It has already agreed to loan 172 million barrels of crude from the Strategic Petroleum Reserve, where levels are at their lowest since 1982.
Source: Reuters via Investing.com
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