The Biden administration has announced plans to sell nearly 1 million barrels of gasoline from the U.S.-managed Northeast Gasoline Supply Reserve, effectively closing the reserve after nearly a decade of operation.
The Department of Energy created the Northeast Gasoline Supply Reserve in 2014 following Superstorm Sandy, which left motorists in the region scrambling for fuel. However, storing refined fuel like gasoline is more costly than storing crude oil, so the closure of the reserve was included in U.S. funding legislation signed by President Biden in March.
The department said bids for the gasoline sale are due on May 28, and the proceeds will go to the Treasury Department’s general funds. The volumes will be allocated in 100,000-barrel quantities, with each barrel containing 42 gallons. The department expects the gasoline to flow into local retailers ahead of the Fourth of July holiday, a peak summer driving demand period.
While the sale was mandated by bipartisan legislation, both the Biden administration and former President Donald Trump have tried to use it for political gain. Energy Secretary Jennifer Granholm stated that the timing of the sale was intended to ensure sufficient supply flows to the Northeast when “hardworking Americans need it the most.”
In contrast, Trump accused Biden of using the reserve to push down retail gasoline prices for political reasons, saying the president was “unable to drill properly.”
U.S. gasoline prices have indeed fallen for four consecutive weeks, now averaging $3.58 per gallon, which is about a nickel above year-ago levels. However, prices remain around 30% cheaper than the record highs seen in June 2022.
Once the Northeast Gasoline Supply Reserve is closed, the energy secretary will not be able to establish any new regional petroleum product reserves unless funding is requested and approved by Congress.
Bob McNally, president of the Rapidan Energy consultancy, noted that unlike the Strategic Petroleum Reserve, which holds hundreds of millions of barrels of crude oil, the gasoline reserve was “too tiny to provide much energy security and won’t be missed.”