Will the Biden Administration release fuel oil from the Northeast Home Heating Oil Reserve? As of this writing the industry, and consumers, were still waiting for the president to respond to a letter from New England senators requesting that Biden do so.
The Northeast Home Heating Oil Reserve (NHHOR) is a one-million-barrel supply of ultra-low sulfur distillate set aside to protect homes and businesses in case a supply disruption occurs during the heating season.
The letter, signed by Senators Maggie Hassan (D-NH), Jack Reed (D-RI), Susan Collins (R-ME), Angus King (I-ME), Patrick Leahy (D-VT), Bernie Sanders (I-VT), Chris Murphy (D-CT), Richard Blumenthal (D-CT), Jeanne Shaheen (D-NH), Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), and Ed Markey (D-MA), reads:
“As winter approaches, we are calling for federal action to help bring down heating costs for households in our region, including releasing stockpiles from the Northeast Home Heating Oil Reserve. Given the current state of energy markets, particularly in New England, we urge you to consider additional targeted actions in preparation for the cold weather season.
“To help combat the increased cost of heating oil, we believe that now is an appropriate time to release inventory from the Northeast Home Heating Oil Reserve, similar to the action you took earlier this year with the Strategic Petroleum Reserve at our urging. Doing so can help address constrained regional energy supplies and recent residential energy price increases.
“The U.S. Energy Information Administration, in its August Short-Term Energy Outlook, forecasts a significant increase in energy prices, particularly in the Northeast. These increased costs will have an outsized impact on households that heat with natural gas, propane, and heating oil – which includes many of our constituents. These costs can have a very real effect on the ability of many New England families to keep their homes at a safe temperature this winter. No family should have to make the decision between paying their bill to keep their children warm, putting food on the table, and keeping the lights on. As New Englanders purchase heating oil and propane for the winter season, it is vital that the administration use all tools available to bring down fuel prices and ensure that there is adequate supply to meet demand.
“With lower inventories of crude oil, propane, and natural gas and the continued global disruption caused by the Russian invasion of Ukraine contributing to a sharp rise in residential energy costs, we urge the administration to closely monitor the energy needs of the Northeast and release stock from the Northeast Home Heating Oil Reserve. This action is consistent with the discretion granted to the President under 42 U.S.C. § 6250b, in order to directly and significantly reduce the adverse impact of a significant regional shortage of home heating oil.
“This is a critical economic issue facing millions of Americans, and we appreciate your attention to this important matter.”
Distillate fuel oil stocks at refineries, bulk terminals, and elsewhere in New England states were the lowest in several years as of June 2022, according to EIA’s latest Petroleum Supply Monthly (PSM). Among the six states in New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), distillate stocks ranged from 90% less than the five-year (2017–21) average in Vermont to 32% below average in New Hampshire at the end of June 2022.
Distillate stocks were low in Central Atlantic states, too. Of the region’s five states (Delaware, Maryland, New Jersey, New York, and Pennsylvania), distillate stocks ranged from 70% less than the five-year average in Maryland to 15% above average in Delaware. These monthly stocks exclude those held within the Northeast Home Heating Oil Reserve (NEHHOR) and New York State Strategic Fuel Reserve, which collectively can hold more than 1 million barrels of distillate fuel oil. NEHHOR was established in 2000, and stocks from the NEHHOR have only been released once, in November 2012, following Hurricane Sandy.
Several factors have contributed to low distillate stocks in New England and Central Atlantic states:
Russia’s full-scale invasion of Ukraine has disrupted global distillate trade, creating a tight market for global distillate.
PBF’s Paulsboro refinery reduced its capacity amid the COVID-19 pandemic. In EIA’s Weekly Petroleum Status Report (WPSR), total distillate stocks in New England were 3.2 million barrels as of September 2 (compared with 2.8 million barrels in June). Stocks in the Central Atlantic were 12.9 million barrels as of September 2 (compared with 11.8 million barrels in June). The latest WPSR indicates commercial distillate stocks have increased in recent months, but they still remain below average.