The Biden administration may release additional volumes of crude oil and heating oil this winter in case of a supply squeeze, CNBC has reported, citing four unnamed sources.
Earlier this year, the administration said it would release 180 million barrels of crude from the strategic petroleum reserve in a bid to tame rising oil prices, prompting criticism that it is compromising energy security in order to reduce the price of gasoline.
As a result of the drawdown, the SPR has declined by over 204 million barrels since the start of the year and it may not begin to be replenished anytime soon, since the White House has reiterated its plans to start buying oil for it when prices fall to $70 per barrel.
Meanwhile, a squeeze in heating oil is looming. The Wall Street Journal reported last month that heating oil prices in the Northeast U.S. - a region that is highly dependent on the fuel for heating during winter - could end up being 45 percent higher this winter than last.
The reason for the price rise was that the surge in gas prices led a lot of utilities in different parts of the world to switch to other fuels, including heating oil, as an alternative. And this has led to lower heating oil inventories.
The U.S. currently holds just 1 million barrels of heating oil in storage, CNBC noted in its report, saying the White House could ask Congress to raise the limit for those inventories twofold and provide funding for new storage sites, from where the administration could draw in times of shortages.
“While improving, industry-held fuel inventories are still below average and the administration continues to engage with industry on asking them to increase fuel stocks,” the Department of Energy told CNBC. “The administration continues to work with lawmakers and industry to identify all options that can help American consumers.”
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.