The Trump administration is offering to loan up to nearly a third of the one-million-barrel U.S. emergency heating oil reserve, the Department of Energy said on Wednesday, in a bid to tame surging prices.
The move, reported first by Reuters, came after senators from both political parties urged the administration to release heating oil from the reserve.
Heating oil is similar in composition to diesel fuel, the price of which has hit records above US$6.50 per gallon following disruptions in the Middle East caused by the Iran war. The Trump administration also blames high prices on Ukrainian attacks on refineries in Russia.
The administration will evaluate whether further releases from the reserve are necessary, a source at the department said.
The U.S. has only tapped the Northeast Home Heating Oil Reserve once since Hurricane Sandy struck the region in 2012. The emergency stockpile is held at sites in New Jersey, Connecticut, Massachusetts and Maine.
About one-third of New England homes use heating oil, including about half of homes in Maine.
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Soaring heating oil costs have emerged as a key issue ahead of the Nov. 3 midterm elections, including in several tight Senate races, as Trump’s fellow Republicans are trying to maintain control of the two chambers of Congress.
Maine Republican Senator Susan Collins is facing a tough reelection fight, while New Hampshire’s open Senate seat is a toss-up between Democrat Chris Pappas and Republican John Sununu.
U.S. Energy Secretary Chris Wright said the administration was “committed to doing everything in our power to lower energy costs.” The department said there would be a competitive bidding process for the loans for both fuel retailers and terminal holders to allow the fuel to flow into areas facing shortages.
Collins said on X the move equals a 13 per cent supply increase for New England and will push down the region’s heating oil costs this winter.
Analysts were not convinced. Tom Kloza, chief energy adviser at Gulf Oil, said on X the move was “puzzling and probably inconsequential” and should have no impact on prices.
Average retail diesel prices have hovered around US$6.32 a gallon in recent days after hitting a record of US$6.52 last month, according to the AAA motorist organization.
The department will loan up to 315,000 barrels of heating oil from Maine, Massachusetts and Connecticut, it said. Deliveries are set to be completed by Nov. 13.
In an effort to control crude oil prices that have risen from the Iran war, the administration has already agreed to loan 172 million barrels of crude from the Strategic Petroleum Reserve. Levels in that emergency stockpile, held on the coasts of Texas and Louisiana, are at their lowest since 1982.
The Trump administration is also backing the Williams Companies’ WMB.N Constitution natural gas pipeline project, which would ship natural gas produced in Pennsylvania to heat homes in New York and New England.
This week, the U.S. released up to US$42 million in Cold War-era Defense Production Act funding for initial work on Constitution. New York has blocked the project on environmental grounds.