Analysis by Energy Workforce President Tim Tarpley
On Tuesday, the Biden Administration said it was planning on releasing 1 million barrels of gasoline from a Northeast reserve established after Superstorm Sandy in an effort to keep gasoline prices low this summer. The storage reserve is located at sites in New Jersey and Maine and will be released in multiple increments of 100,000 barrels at a time. The sale will require the entire 42-million-gallon reserve to be transferred or delivered no later than June 30. Congressional Republicans had long criticized the reserve since President Obama created it without congressional authorization. The reserve costs about $19 million a year to maintain.
The Department of Energy, DOE, argues that the move will help keep supply high during the summer driving season and was mandated by Congress in the recent funding package in March. The sale will be intended to empty the facility and its entire stock and close it down for good. Gasoline prices are currently averaging around $3.60 per gallon nationwide, up only about 6 cents from a year ago.
Analysts feel that emptying the reserve will have minimal impacts on gasoline prices nationally but may put some downward pressure on prices in the northeast. The impacts will be minimal as the reserve only amounts to about 2.7 hours of total U.S. gasoline consumption.
The Strategic Petroleum Reserve is much larger and more impactful to the US market. President Biden has significantly drained this resource since the 2022 Russian invasion of Ukraine. The President has been slow in refilling that reserve, which is currently at 367 million barrels of oil as of last week. This level is still lower than the Russia-Ukraine war, but it is still the largest reserve in the world. Biden has faced criticism for not refilling the reserve faster, given the significant geopolitical challenges around the globe.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
