©Reuters. FILE PHOTO: The exterior of the White House is seen from the North Lawn in Washington, U.S., August 19, 2021. REUTERS/Cheriss May/File Photo
By Jarrett Renshaw and Timothy Gardner
(Reuters) – The White House is considering a plan to boost inventories at the Northeast Home Heating Oil Reserve, battling a supply crunch that could drive up prices and punish inflation-worn consumers, according to three sources familiar with the news. the discussions.
The plan could involve diverting revenue from future sales of the Strategic Petroleum Reserve to purchase for Northeast reserves, two of the sources said.
The administration is also considering buying supplies of diesel and making it available to companies, a move that would keep supplies in the U.S. and out of the export market, the sources said.
The United States entered the winter season with historically low diesel levels, unnerving White House officials who spent the past year trying to dampen soaring gasoline prices. White House officials have held at least two meetings with members of the oil industry to discuss ways to boost diesel supplies.
After months of public wrangling, the two sides described recent talks as more constructive.
“We are committed to working with lawmakers and industry to continue to prepare for all contingencies and protect American consumers. No option is out of the question,” White House spokesman Abdullah Hasan said Wednesday.
Diesel is a workhorse of the economy, helping to power most major industries and powering cargo deliveries by truck, rail, and ship.
Distillate inventories (USOILD=ECI), which includes diesel and heating oil, rose by 1.7 million barrels last week, versus expectations for a decline of 550,000 barrels. Despite the increase, inventories remain lower than usual for this time of year.
Nearly one in five homes in the Northeast uses diesel as heating oil. According to the US Energy Information Agency’s winter forecast, the cost of heating a home using diesel is expected to increase by 27% over last year.
Northeast Home Heating Oil Reserve currently holds about 1 million barrels, or enough for about 10 days’ supply. It hasn’t been tapped since 2012, when it was used to provide fuel to emergency responders after Hurricane Sandy.
The Energy Department did not immediately respond to requests for comment.
The administration has repeatedly urged the oil industry to increase inventories of gasoline and diesel, even threatening to limit exports to boost domestic supplies.