The East Coast of the U.S. has some of the lowest seasonal diesel inventory on record. Retail diesel prices at the pump from the Washington–Baltimore metropolitan area to New York City are well over $6 a gallon, a record high. Major trucking companies warned drivers of imminent shortages as the summer driving season begins later this week. Now the Biden administration is scrambling and has proposed an emergency action to drain a critical stockpile to mitigate the massive supply crunch.
A senior White House official told CNN that President Biden could soon release diesel from the Northeast Home Heating Oil Reserve to arrest record-high prices for diesel across the Mid-Atlantic and Northeast regions.
The senior official said President Biden is prepared to authorize the release if conditions deteriorate, adding the supply crunch has stabilized in recent days.
What’s alarming is East Coast diesel inventories have fallen to the lowest levels since 1990. National stocks are around a two-decade low
“The system is definitely under strain,” the senior White House official said.
Tight fuel supplies are due to many factors. Two major ones are declining refinery capacity and increased fuel shipments to Europe.
CNN notes, “the release would be limited by the relatively small size of the reserve, which only contains 1 million barrels of diesel — equal to about a day’s worth of supply in the region.”
“It’s small potatoes. It might buy a couple of weeks or even months, but it doesn’t solve the underlying issues,” Andy Lipow, president of Lipow Oil Associates, said.
Major trucking firms have prepared drivers for diesel shortages in the Northeast. Also, refinery and fuel station owner John Catsimatidis warned: “I wouldn’t be surprised to see diesel being rationed on the East Coast this summer.”
As of Monday morning, retail diesel prices in New York stood around $6.515, a record high and doubling of price from a year ago.
The East Coast diesel shortage appears dire if the Biden administration has to propose a plan to drain another strategic stockpile. So far, the release of a million barrels of crude per day from the SPR has yet to arrest WTI prices.
Record high fuel prices have hampered Biden’s approval rating — perhaps — why he’s considering another cunning attempt to lower pump prices.