U.S. Department of Energy releases 1 million barrels of gasoline from its reserve to lower prices ahead of summer

In a move aimed at alleviating the burden of high gasoline prices on American families, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves has initiated a solicitation for the sale and liquidation of one million barrels of gasoline from the Northeast Gasoline Supply Reserve (NGSR), essentially closing the near decade-old reserve.

The announcement, made yesterday, underscores the Biden-Harris Administration's commitment to easing the strain on consumers as they prepare to hit the road for the summer.

The DOE launched the Northeast Gasoline Supply Reserve in 2014 in response to the fuel shortage caused by Superstorm Sandy.

However, storing refined fuel is more expensive than storing crude oil. Therefore, Biden's March signing of U.S. funding legislation contained a clause about eliminating the reserve.

Strategically timed sale

Jennifer M. Granholm, the U.S. Secretary of Energy emphasized the strategic timing of the release, stating, “The Biden-Harris Administration is laser-focused on lowering prices at the pump for American families, especially as drivers hit the road for summer driving season,” Granholm added.

“By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state and northeast at a time hardworking Americans need it the most.”

The Consolidated Appropriations Act authorizes the sale of one million barrels of gasoline from NGSR storage sites in Port Reading, NJ (900,000 bbl) and South Portland, ME (98,824 bbl). The volumes will be sold in quantities of 100,000 barrels to ensure a fair and competitive process, allowing participation from fuel retailers and terminal holders.

Interested entities must submit their bids by 11:00 a.m. Central Time on May 28, 2024. The proceeds from the sale will be deposited into the Treasury. This sale is expected to inject one million barrels of gasoline blendstock into the commercial market, offering flexibility to buyers in deciding its usage.

Contracts resulting from the sale will be subject to contract price adjustment as outlined in the Supplements and Amendments to the Standard Sales Provisions (SSP). The Notice of Sale issued by the DOE contains comprehensive terms and conditions along with specific instructions for the preparation and submission of offers.

This strategic move by the DOE aims to ensure adequate gasoline supply and stabilise prices, benefiting American families and consumers as they prepare for the upcoming Fourth of July holiday. With the summer driving season approaching, the sale of gasoline reserves is expected to have a positive impact on the nation's energy landscape.