To Fight Inflation & Help Consumers and Businesses, U.S. Senators Urge Biden to Tap Diesel Fuel Reserve
WASHINGTON, DC -- As Vladimir Putin’s invasion of Ukraine continues to drive up oil prices, U.S. Senators Jack Reed (D-RI), Richard Blumenthal (D-CT), and Chris Van Hollen (D-MD) are urging President Biden to ease the supply crunch by releasing fuel from the Northeast Home Heating Oil Reserve (NEHHOR). The NEHHOR contains barrels of ultra-low sulfur distillate, which can be used as home heating oil or diesel fuel.
The last time the federal government tapped the Northeast Home Heating Oil Reserve was in 2012, in the aftermath of Superstorm Sandy.
In a letter to President Biden, Reed, Blumenthal, and Van Hollen wrote: “as Putin’s war in Ukraine continues to push oil prices higher, and Big Oil continues to price gouge American consumers, we urge you to take further action to insulate Americans from rising prices, including tapping into the Northeast Home Heating Oil Reserve (NEHHOR).”
As more people return to work, school, and travel fuel demand in the U.S. has outstripped the output of refineries that slowed or halted production during the pandemic.
Diesel fuel is crucial to the U.S. economy because it is used to power everything from big-rig trucks to heavy machinery and equipment used by the agriculture and construction industries, to other types of cargo shipping. Higher diesel prices can easily translate into higher retail prices for food and a range of consumer products.
According to AAA, the average gallon of gas costs American drivers $4.76, while a gallon of diesel averages $5.56. Diesel prices now average above $6 a gallon in several states, including: California, Connecticut, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. Rhode Island’s price for diesel is currently about $6.30 per gallon, Connecticut’s is $6.22, Maryland’s is $5.90, and Californians pay the highest average price of $6.75 a gallon for diesel.
The Northeast Home Heating Oil Reserve contains about 1 million barrels of fuel. This is not enough to solve the crisis, but tapping it could provide a short-term measure of relief to American families and businesses reeling from oil price shocks that are heavily inflated due in large part to Putin’s invasion of Ukraine.
Additionally, even though the COVID-19 pandemic has reduced U.S. refining and production output, U.S. energy exporters are raking in record profits by sending more domestically produced gas and diesel to foreign markets overseas. Fuel manufacturers are now enjoying historic profit margins for the fuels they produce. Exports of U.S. diesel to Latin America and Europe are currently at record amounts of up to 1.5 million barrels a day.
The letter concludes: “we hope you will consider using all tools at your disposal, including issuing a release from the Northeast Home Heating Oil Reserve, to ease this diesel supply crunch and lower home energy costs for American families.”
The OPEC+ oil cartel chaired by Saudi Arabia announced plans this week to boost its oil production target by 648,000 barrels per day in July and August instead of the 400,000 barrels a day it originally planned to add. However, OPEC+ has a spotty record of actually meeting production increases, which means Americans could continue to pay more at the pump due to foreign oil price shocks.
Full text of the letter follows:
June 3, 2022
President Joseph R. Biden
The White House
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20500
Dear President Biden:
We appreciate your decision to release millions of barrels of oil from the federal stockpile, which is increasing gasoline supply. Yet, as Putin’s war in Ukraine continues to push oil prices higher, and Big Oil continues to price gouge American consumers, we urge you to take further action to insulate Americans from rising prices, including tapping into the Northeast Home Heating Oil Reserve (NEHHOR).
The Department of Energy created the NEHHOR in 2000 following a significant spike in the price of home heating oil. The NEHHOR currently holds one million barrels of refined product that can be used as heating oil or diesel fuel. While much more will be needed to address the full scope of the oil supply crunch, we believe utilizing the NEHHOR is a useful tool to help address projected increases in home heating oil costs as well as record-high prices for diesel fuel.
The cost of home heating oil is expected to rise again this winter, with the U.S. Energy Information Administration projecting a 21% increase from December 2021 to December 2022. In addition, U.S. diesel fuel prices have reached record-high levels and may go even higher this summer. Last month the national average price for diesel was over $5.50 per gallon – a 75% increase from a year ago. These increased costs impact everyone – from the farmers who use diesel-powered machinery to the trucks that transport goods to the people who buy those products.
We know that to truly lower costs in the long term, we must make the transition to clean energy and break our reliance on oil and hostile foreign actors. To that end, we were proud to support the Infrastructure Investment and Jobs Act, championed by your administration, which will invest billions in public transit, electric vehicles, and clean energy projects. We must also enact your clean energy plan that includes tax credits and grants that would make clean energy, clean vehicles, and other clean technologies more affordable and competitive.
Yet, as we work toward that goal, we hope you will consider using all tools at your disposal, including issuing a release from the Northeast Home Heating Oil Reserve, to ease this diesel supply crunch and lower home energy costs for American families.
Thank you for your continued leadership on this important issue.