Yahoo Finance Biden administration says it will sell 1M barrels of gas from Northeast reserve to cool prices at the pump
The Biden administration is soliciting the sale of 1 million barrels of gasoline from the Northeast Gasoline Supply Reserve in what it calls a bid to lower costs for motorists ahead of the summer driving season.
The sale will be distributed in increments of 100,000 barrels — which the Department of Energy says “will ensure a competitive bidding process” for both retailers and terminals.
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“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,” Energy Secretary Jennifer Granholm said in a statement.
A bid to lower fuel costs
U.S. gas prices are just over $3.61 per gallon on average as of May 22, according to the American Automobile Association — a slight increase from $3.54 per gallon a year ago.
Reuters also reports the market is well-supplied, thanks to greater refinery production and less demand for fuel.
But while the sale might have an impact on fuel prices, it also follows a mandate by Congress to sell off and close the reserve, according to multiple news outlets. This was part of a deal to avoid a partial government shutdown back in March.
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The fuel will be transferred or delivered to gas retailers and terminals no later than June 30, 2024, ahead of the July 4 holiday.
What this really means for US gas prices
GasBuddy analyst Patrick De Haan told The Associated Press that the sale will actually have little impact on gasoline prices nationally, although there “may be a slight downward pressure on prices” in the northeastern U.S.
The million-barrel reserve only accounts for about 2.7 hours of total U.S. gasoline consumption, he said.
“As an analyst, this reserve never really made a whole lot of sense to have,’' De Haan said, adding that the reserve is very small compared to the Strategic Petroleum Reserve, which holds hundreds of millions of barrels of crude oil, and must often be rotated “because gasoline has a shelf life.”
The Energy Department established the Northeast reserve in 2014 to help offset the energy shortages caused by Superstorm Sandy, but has since been the subject of criticism since storing refined oil is more costly compared to storing crude.
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