White House Weighs Use of Emergency Diesel Reserve to Alleviate Supply Shortage, According to Reuters

By Trevor Hunnicutt and Jarrett Renshaw

TOKYO – The White House is contemplating an emergency declaration to release diesel fuel from a seldom-used stockpile as part of efforts to alleviate a significant supply shortage and combat escalating prices, an administration official disclosed on Monday.

President Joe Biden has emphasized that addressing soaring inflation and gas prices is a top priority for his administration, particularly in the lead-up to the congressional elections in November. Republicans aiming to regain control of Congress have criticized Democrats by highlighting the surge in prices.

Diesel fuel is crucial for the U.S. economy, powering agriculture, construction, and the transportation of goods via trucks, trains, and boats. Increased diesel prices contribute to rising inflation, which has reached its highest levels in four decades.

The administration is considering utilizing the Northeast Home Reserve, established in 2000 to assist with supply challenges and only used once in 2012 following Hurricane Sandy. However, the potential impact of such a release would be limited due to the reserve’s relatively small size, which holds just 1 million barrels of diesel.

"We have prepared this reserve option to proactively address the issue and will not hesitate to deploy other measures available to support families and the economic recovery," an official stated.

As of Sunday, the national average price for diesel reached $5.56 per gallon, slightly below last week’s record of $5.58, according to a national motorist advocacy group. This represents a 75% increase compared to the same time last year.

The situation is even more dire in the Northeast U.S., where several refineries have closed since 2000. For example, the average price for a gallon of diesel in New York state is $6.52, marking a 102% increase from a year ago.

Recently, U.S. distillate stocks dropped to their lowest levels since 2005, with current levels at 105.3 million barrels. Stocks on the East Coast even reached an all-time low in early May but have recently rebounded to 22.5 million barrels, according to the latest federal data.

"We need all the help we can get. While the phrase ‘Putin’s price increase’ may be mocked, we are indeed facing a supply disruption due to the Russia-Ukraine conflict," explained John Kilduff, a partner at Again Capital LLC, referring to claims by Democrats that rising fuel prices are linked to the invasion of Ukraine.

"With distillate fuel exports at high levels, it is evident that we are all facing this challenge globally. It’s time to utilize available resources," Kilduff added.