The Trump administration is offering to loan up to nearly a third of the 1-million-barrel US emergency heating oil reserve, the Department of Energy said on Wednesday. The aim is to bring down prices that have climbed amid diesel shortages linked to the wars in Iran and Ukraine.
The decision followed calls from senators of both parties, who urged the administration to release heating oil from the reserve. Diesel comes from the same refining stream, and its prices have reached records above $6.50 per gallon because of Middle East disruptions caused by the Iran war. A source at the department said the administration would assess whether further releases were needed.
Loan terms and reserve sites in the Northeast
The department said it would run a competitive bidding process for the loans, open to both fuel retailers and terminal holders. The goal is to get fuel moving into areas facing shortages. It will lend up to 315,000 barrels from Maine, Massachusetts and Connecticut, with deliveries due to be completed by November 13.
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The emergency stockpile is kept at sites in New Jersey, Connecticut, Massachusetts and Maine. The US has tapped it only once since Hurricane Sandy hit the region in 2012. Heating oil is widely used in New England, where about one-third of homes rely on it, and in Maine, where the share is roughly half.
Heating costs become an election issue
Soaring heating oil costs have become a major concern ahead of the November 3 elections, including in several close Senate races. Trump’s fellow Republicans are working to keep control of both chambers of Congress.
Maine Republican Senator Susan Collins faces a difficult reelection fight. In New Hampshire, the open Senate seat is a toss-up between Democrat Chris Pappas and Republican John Sununu. In Alaska, Republican Senator Dan Sullivan is being challenged by Democrat Mary Peltola.
Energy Secretary Chris Wright said the administration was “committed to doing everything in our power to lower energy costs.”
Pipeline backing and crude oil reserve levels
The administration is also supporting the Williams Companies’ Constitution natural gas pipeline, which would carry gas produced in Pennsylvania to heat homes in New York and New England. This week, the US released up to $42 million in Cold War-era Defense Production Act funding for initial work on the project. New York has blocked the pipeline on environmental grounds.
Separately, the administration is struggling to control crude oil prices, which have risen due to the Iran war. It has already agreed to loan 172 million barrels of crude from the Strategic Petroleum Reserve. Stocks in that reserve, held on the coasts of Texas and Louisiana, are at their lowest level since 1982.
