By Timothy Gardner
WASHINGTON (Reuters) – President Joe Biden’s administration will sell nearly 1 million barrels of gasoline from the U.S.-controlled stockpile in northeastern states as required by law, the Energy Department said on Tuesday, boosting the nearly decade-old reserve is actually closed.
The department established the Northeast Gasoline Supply Reserve in 2014 after Superstorm Sandy sent motorists scrambling for fuel. But storing refined fuel is more expensive than storing crude oil, so closing the reserve was included in the U.S. financing legislation signed in March by Biden, a Democrat.
The bidding is due on May 28 and the Treasury Department’s general fund will receive the proceeds from the sale, the ministry said.
The volumes will be allocated in quantities of 100,000 barrels, with each barrel containing 42 gallons, the ministry said. Gasoline should flow to local retailers before the July 4 holiday, the report said.
Although the sale was mandated by bipartisan legislation, both the Biden administration and Republican presidential candidate Donald Trump tried to score points with it.
Energy Secretary Jennifer Granholm said the Department of Energy had timed the sale to coincide with the run-up to the peak in summer car demand.
“By strategically releasing this reserve between Memorial Day and the Fourth of July, we are ensuring sufficient supply flows to the Northeast at a time when hardworking Americans need it most,” Granholm said in a news release.
U.S. gasoline prices have fallen for four weeks in a row to $3.58 a gallon despite abundant supply, but still remain about a nickel above year-ago levels, according to the Energy Information Administration.
Trump said Biden used the reserve for political reasons to lower retail gasoline prices.
“And so he’s trying to stop that, because high gas prices are not good for the election,” Trump said outside the courtroom in New York, where his hush money trial is taking place.
U.S. gasoline prices are now about 30% cheaper than they were in June 2022, when they reached a record high of more than $5.00 per gallon. Prices have fallen as oil production has hit a record under Biden.
Trump said Biden sold the gasoline “because he can’t drill well.”
The energy department will be selling into a well-supplied market, where pump prices fell for a fourth straight week on Monday despite the run-up to the Memorial Day weekend that kicks off the summer driving season.
Higher refinery production and weak fuel demand this year have helped ease some of the supply constraints that U.S. consumers have faced since the pandemic.
Gasoline inventories along the US East Coast stood at 55.5 million barrels, up 6% year over year, but about 8% below the historical average for this time of year.
The companies buying the gasoline, likely retailers and fuel terminals, will have the fuel transferred or delivered by June 30, the report said. Approximately 900,000 barrels will be sold from the reserve’s Port Reading, New Jersey, location, and nearly 99,000 barrels from its South Portland, Maine, location.
Once the reserve is closed, the Energy Secretary cannot establish a new regional reserve for petroleum products unless funding is requested in advance of an annual budget submitted by the President and approved by Congress.
Bob McNally, president of consulting firm Rapidan Energy, said that unlike the Strategic Petroleum Reserve, which holds hundreds of millions of barrels of crude oil, the gasoline reserve was “too small to provide much energy security and will not be missed.”
