President Biden may order fuel distributors to keep greater inventories at home in a bid to ensure an adequate supply of heating oil for the Northeast, Energy Secretary Jennifer Granholm has said, as quoted by Bloomberg.
The reason is a looming shortage of diesel and heating oil, especially in the Northeast, which the White House is worried may compromise the region’s energy security during peak heating season.
Indeed, the Wall Street Journal reported this week that prices for heating oil in the Northeast could be up to 45 percent higher this winter because of scant supply. Inventories are also low—the lowest since 1951, according to the WSJ.
Meanwhile, exports of middle distillates, especially to Europe, remain considerable ahead of the European Union’s embargo on Russian crude and fuels. According to Secretary Granholm, the United States wants to continue supplying fuels to Europe but “we also want to make sure there’s enough fuel in the United States,” she told Bloomberg in an interview.
The biggest fear of fuel suppliers, according to the Wall Street Journal, is an extended period of cold weather during the winter that would make gas more expensive, too, forcing utilities to try and switch to distillates. That’s according to the president of the Connecticut Energy Marketers Association, Chris Herb.
If fuel suppliers had to compete with power utilities over limited volumes of distillates, Herb said, “They will run us dry.”
It is not a big surprise, then, that fuel export controls are on the table for the Biden administration.
“It may not be a business choice that they make, but we’re asking, as the companies that are operating in America, to do what they are doing in other countries” Granholm said, referring to minimum-inventory requirements in some countries. “And that’s why the president is looking at that.”
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.