Latest: The Trump administration is offering to loan up to nearly a third of the 1 million barrel Northeast Home Heating Oil Reserve, the Department of Energy said on Wednesday, with deliveries of up to 315,000 barrels from sites in Maine, Massachusetts and Connecticut to be completed by November 13. The department said there would be a competitive bidding process for the loans, open to fuel retailers and terminal holders, and that it would evaluate whether further releases are necessary. Energy Secretary Chris Wright said the administration was committed to doing everything in its power to lower energy costs. The reserve, held in New Jersey, Connecticut, Massachusetts and Maine, has been tapped only once since Hurricane Sandy in 2012, and the move followed calls from senators of both parties as diesel, which comes from the same refining stream as heating oil, hit records above 6.50 dollars a gallon on supply disruptions from the wars in Iran and Ukraine. About a third of New England homes use heating oil, and about half in Maine.
The Department of Energy has called on refiners to ramp up diesel production further, with talks under way with refiners in the United States and abroad, Reuters reported, citing two high ranking department officials. It is the latest move as the national average price of diesel sticks above 6 dollars a gallon despite months of intervention, from a sanctions waiver on Russian exports in exchange for additional diesel supply to the temporary removal of federal tax on red dye diesel and an 8 billion dollar fuel aid program announced earlier this week by the Department of Agriculture.
The administration also invoked the Defense Production Act to motivate refiners to restart idle plants. That measure’s outcome remains uncertain, and restarting idled refineries takes time and money even with 1 billion dollars of Defense Production Act funding; it will not happen overnight. Energy Secretary Chris Wright said earlier this week: “We are talking about reopening every refinery we can. There are dialogues there, and that’s a tough challenge. I’m not saying all these are going to happen.”
The Russian leg of the strategy has disappointed on size. Russia lifted its diesel export ban in response to Trump’s sanctions waiver, but analysts told OilPrice.com the volumes agreed between Presidents Trump and Putin are too small to make a difference, and Reuters reported separately on Tuesday that department officials are working with refiners around the world to boost fuel output as the diesel shortage raises prices. The IEA said in its October Oil Market Report that September’s global diesel exports were about 700,000 barrels a day below the year earlier level, with rebuilding lost inventories beyond normal seasonal moves unlikely before the second half of 2027.