The March appropriations bill passed by Congress and signed by President Biden to fund the federal government mandated the emptying of the federal gasoline reserve in fiscal year 2024, which concludes September 30, followed by its eventual closure. That means about 1 MMbbl — 42 MM gallons — of gasoline will find its way to the market in the next few months, or in as little as a few weeks. The Department of Energy (DOE) is planning to distribute those barrels by the end of June to help keep a lid on gasoline prices ahead of the July 4 holiday and into the heart of the summer driving season. In today’s RBN blog, we look at the decision to close the reserve and the potential impact of those barrels hitting the market.
Let’s start with the history of the gasoline stockpile — formally called the Northeast Gasoline Supply Reserve (NGSR; magenta tanks in Figure 1 below). It doesn’t go back as far (or come anywhere near in size) as the more well-known Strategic Petroleum Reserve (SPR), which began in the 1970s. The NGSR was created in 2014, two years after Superstorm Sandy made landfall in the Northeast (see Save it for Later). The powerful storm badly damaged two refineries and shut more than 40 fuel terminals in the New York Harbor area — a critical oil and refined products hub — due to water damage and power loss and left some New York-area gas stations without fuel for nearly a month. The 1-MMbbl reserve was intended as a buffer, large enough to allow commercial suppliers to compensate for initial disruptions but not big enough to deter them from their own stock-keeping. The year it was established, designated terminals stored 700 Mbbl of gasoline in the New York Harbor area, 200 Mbbl in the Boston area and 100 Mbbl in South Portland, ME. The gasoline reserve, which is stored in above-ground tanks and managed by the DOE, has never been tapped for distribution.
Figure 1. Northeast Gasoline and Home Heating Oil Reserves. Source: Department of Energy
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