- The White House is weighing whether to release emergency reserves of diesel, CNN reported.
- The Northeast Home Heating Oil Reserve has only been used once, following 2012's Hurricane Sandy.
- Diesel prices have jumped roughly 75% over the last year as inventories have plummeted.
The US could tap a rarely used stockpile of diesel to try to ease a supply crunch that has sent prices of the critical industrial fuel soaring in recent months.
The White House is weighing whether to open up the Northeast Home Heating Oil Reserve to address the crisis, a White House official told CNN. It was created in 2000 and has only been used once, following 2012's Hurricane Sandy.
However, since this reserve is small at only 1 million barrels in total — or roughly one day's worth of supply for the region — the impact would be minimal.
Prices for the key fuel have surged roughly 75% over the last year as inventories have plummeted. US stockpiles for the most commonly used diesel have dropped 43% since 2022 to the lowest level since 2014. Like many energy commodities, market demand has dramatically outstripped supply through 2022, leading to sharp price increases and fears of persistently high inflation.
In the Northeast things are even more dire. The average price for a gallon of diesel in New York state is $6.52, up 102% from a year ago.
Diesel powers much of the economy, as it is responsible for fueling big-rig trucks, farm equipment, and heavy industrial machinery.
Tapping the diesel reserve would echo the administration's relief actions from earlier this year. The White House announced on March 31 that it will release 1 million barrels of crude oil per day from the nation's Strategic Petroleum Reserve over the next six months to counter elevated energy prices. That equates to an additional 180 million barrels of crude set to hit the market by the time the release ends in the fall. The program aims to "serve as a bridge" until domestic oil companies can ramp up production, administration officials said in March.
Yet fuel prices continue to hit record highs, and with inventory still strained, the diesel market is facing its worst crisis in decades, analysts told Insider earlier.
The influx of crude supply helped somewhat in April, but refining capacity is the latest bottleneck to boost prices. Refineries process crude into gas and diesel, and the massive gap between supply and demand has led firms to seek record-high "crack spreads," the fees charged for converting crude to finished products. Without more refining capacity, the supply of usable gasoline and diesel will continue to fall short of Americans' needs.
"There's been significant demand due to economies opening up domestically and globally," Rob Thummel, managing director at Tortoise Capital, previously told Insider. "With supply not being able to keep up with the big demand, we haven't seen anything like this in decades, since the [19]70s."