The Biden administration announced on Tuesday that it will be tapping into a reserve of 1 million barrels of gasoline from the Northeast, which was originally established after Superstorm Sandy. The aim of this move is to help reduce prices at the gas pump during the summer months.
The Energy Department announced that it will be selling gasoline from storage sites in New Jersey and Maine. The sale will be conducted in increments of 100,000 barrels at a time. This approach aims to create a competitive bidding process, ensuring that gasoline can be readily available to local retailers before the July 4 holiday. The department also aims to sell the gasoline at competitive prices, benefiting consumers.
The Department’s decision to sell off the Northeast reserve, a mandate from Congress, aims to reduce costs for American families and consumers. This move comes after Congress approved a spending deal in March to prevent a partial government shutdown.
The Energy Department has announced the sale of 1 million barrels, equivalent to approximately 42 million gallons, with the intention of providing relief for motorists as the summer driving season commences.
Gasoline prices across the country currently stand at an average of $3.60 per gallon, marking an increase of 6 cents compared to last year, as reported by AAA. In a bid to curb inflation, a challenge faced by the party occupying the White House during election years, tapping into gasoline reserves remains one of the limited actions that a president can undertake independently.
“The Biden-Harris administration is committed to reducing fuel prices for American families, especially as they embark on their summer road trips,” expressed Energy Secretary Jennifer Granholm. She further emphasized, “By strategically tapping into the reserve between Memorial Day and July 4th, we are guaranteeing an ample supply for the tri-state and Northeast regions during a time when hardworking Americans rely on it the most.”
According to White House Press Secretary Karine Jean-Pierre, the gas release from the Northeast reserve is a continuation of President Joe Biden’s efforts to reduce gas and energy costs. This includes the historic releases from the Strategic Petroleum Reserve and the significant investment in clean energy.
In 2022, following Russia’s invasion of Ukraine, President Biden took a significant step by depleting the Strategic Petroleum Reserve. This action resulted in the stockpile reaching its lowest level since the 1980s. The decision was made in an election year to stabilize the soaring gasoline prices that were a consequence of the war in Europe. However, Republicans criticized the President, accusing him of using a reserve meant for national emergencies for political gain.
The Biden administration has already started replenishing the oil reserve, which currently holds over 367 million barrels of crude oil as of last week. Although this amount is lower than pre-Russia-Ukraine war levels, it still remains the largest emergency supply of crude oil in the world.
According to the Energy Department, for the Northeast sale, the transfer or delivery of fuel must be completed by June 30th.
Congressional Republicans have been consistently critical of the Northeast reserve, arguing that it should have been established by Congress instead of former President Barack Obama. In a 2022 report, the Government Accountability Office highlighted that the gasoline reserve, which has never been utilized, would only offer limited relief in the event of a severe shortage. Maintaining the reserve incurs an annual cost of approximately $19 million.
According to GasBuddy analyst Patrick De Haan, the sale of the Northeast reserve is unlikely to have a significant impact on gasoline prices nationwide. However, he noted that there might be a slight downward pressure on prices in the Northeast. De Haan explained that the million-barrel reserve only represents about 2.7 hours of total U.S. gasoline consumption.
In an interview with the Associated Press, De Haan, an analyst, expressed his skepticism about the necessity of maintaining the gasoline reserve. According to De Haan, the reserve is relatively small and requires regular rotation due to the limited shelf life of gasoline. He also noted that the United States is unique in having an emergency stockpile of gasoline, as other nations do not maintain such reserves.
According to him, the Strategic Petroleum Reserve contains significantly larger quantities of oil required during an emergency.
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