this A Biden administration is preparing A senior White House official told Fox Business that the seldom-used diesel stockpile is being tapped as the president faces pressure to lower fuel prices.
White House officials have prepared an emergency declaration to allow President Biden to release diesel fuel from Northeast home heating oil reserves to deal with short-term supply shortages should the situation worsen. CNN first reported the news.
The price of diesel, the fuel used by most farmers and shippers, has surged nearly 75 percent over the past year, with the national average costing $5.54 on Monday, according to the AAA. That’s up from $3.17 a year ago and close to the all-time high of $5.56 set a week ago.
Prices are even higher in the Northeast because it has fewer refineries than the rest of the country: In New York, for example, prices are as high as $6.51 a gallon—a staggering 102% increase from a year ago.
High oil prices are rooted in a faster-than-expected economic recovery amid the pandemic, sparking hottest inflation decades Due to strong consumer demand, trillions in government stimulus and disruptions to global supply chains. Russia’s war in Ukraine has also magnified the problem: Diesel inventories in the northeast have plunged to record lows in recent weeks, in part because of the conflict.
Distillate inventories have plummeted and are about 23% below the five-year average for this time of year, according to a recent report from the Energy Information Administration. Nationwide, distillate inventories, including diesel, fell to their lowest levels since 2008, while East Coast inventories fell to record lows.
Alarmed by falling inventories and rising prices in the Northeast, the Biden team began conducting internal briefings and working with fuel retailers and Leading Refinery and Truck Stop Operatorto better understand the situation, White House officials said.
The Northeast Home Heating Oil Reserve was created in 2005 and consists of about 1 million barrels of diesel, roughly the region’s supply in one day. Previously, the reserve had only been developed once after Hurricane Sandy in 2012. White House officials said the Biden team understands that developing the reserve may not drastically reduce diesel prices, but it could prevent on-site power outages and businesses that are “extremely disruptive to families.” “
By contrast, the White House has repeatedly tapped the nation’s emergency oil reserve, known as the Strategic Petroleum Reserve, to help lower rising energy prices. The reserve currently contains 420 million barrels of crude oil, even after its recent release.
At a time when Americans can’t afford it, the rising cost of diesel threatens to fuel inflation that is already sky-high for most goods and services.
The U.S. Labor Department reported earlier this month that consumer prices surged 8.3% in April to near a 40-year high and far faster than economists had expected. It underscores how strong inflationary pressures remain in the economy, despite hopes that consumer prices may peak soon.
Rising inflation is eroding U.S. workers’ strong wage gains in recent months: According to the Labor Department, real average hourly earnings fell 0.1% in April from the previous month, as rising inflation eroded 0.3% total wage growth. On a yearly basis, real earnings in April actually fell 2.6%.