US to Close Northeast Gasoline Reserve with 1 Million-Barrel Sale, According to Reuters

By Timothy Gardner

WASHINGTON – The Biden administration will sell nearly 1 million barrels of gasoline from the U.S.-managed stockpile in the northeastern states, as mandated by law, effectively marking the closure of the long-standing reserve, the Department of Energy announced on Tuesday.

The Northeast Gasoline Supply Reserve was established in 2014 in response to fuel shortages that arose after Superstorm Sandy. However, since storing refined fuel is more costly than storing crude oil, the decision to close the reserve was included in U.S. funding legislation signed by President Biden in March.

Bids for the gasoline are due on May 28, and the proceeds will go to the Treasury Department’s general funds, according to the department’s statement.

Gasoline will be sold in increments of 100,000 barrels, with each barrel containing 42 gallons. The gasoline is expected to reach local retailers in time for the Fourth of July holiday.

While the sale was required by bipartisan legislation, both the Biden administration and Republican presidential candidate Donald Trump have attempted to leverage it for political advantage.

Energy Secretary Jennifer Granholm emphasized that the timing of the sale aligns with the upcoming peak summer driving season. "By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the northeast at a time hardworking Americans need it the most," Granholm stated.

U.S. gasoline prices have decreased for four consecutive weeks, currently averaging $3.58 per gallon, as supply remains ample, although prices are still slightly higher compared to the same time last year.

Trump criticized Biden, claiming the release of gasoline from the reserve is a tactical move to lower prices for political gain. "And so he’s trying to stop that because high gasoline prices are not good for elections," Trump commented outside a New York courtroom.

Current gasoline prices are about 30% lower than the peak levels seen in June 2022, when they surpassed $5.00 per gallon. The drop in prices has coincided with increased oil production under Biden’s administration.

The Department of Energy’s sale is occurring in a market that is well-supplied, with pump prices having fallen despite the approach of the Memorial Day weekend, which traditionally marks the start of the summer driving season. Increased refinery output and subdued fuel demand have alleviated some supply challenges faced by consumers since the pandemic began.

As of now, gasoline inventories on the U.S. East Coast stand at 55.5 million barrels, which is 6% higher than the previous year, yet still about 8% below the historical average for this time.

The gasoline will originate from two sites: approximately 900,000 barrels from Port Reading, New Jersey, and nearly 99,000 barrels from South Portland, Maine. Buyers, which are expected to include retailers and fuel terminals, must have the gasoline transferred or delivered by June 30.

Upon closure of the reserve, the energy secretary will not be able to establish any new regional petroleum product reserves unless prior funding is requested in an annual budget submitted to Congress by the president.

Bob McNally, president of Rapidan Energy consultancy, noted that unlike the Strategic Petroleum Reserve, which contains hundreds of millions of barrels of crude oil, the gasoline reserve was "too tiny to provide much energy security and won’t be missed."