White House Reportedly Considering Rare Release of Diesel Fuel Reserve as Oil Price Crunch Continues

After a major spike in diesel fuel prices, the Biden administration is considering releasing part of a special strategic reserve to alleviate the supply crunch. However, the shortage is caused by corporations chasing profits, not by production shortfalls, and critics say the move won’t amount to much.

The release would come from the Northeast Home Heating Oil Reserve, a 1 million barrel stash of ultra-low sulfur distillate (ULSD) diesel fuel created in 2000 to guarantee a supply of heating oil to homes in the country’s northeast.

While the US boycott of Russian petroleum products hasn’t put much of a dent in the US’ supply of diesel fuel, the beginning of Russia’s special operation in Ukraine in February sent prices sky-high in Europe, which imports most of its diesel. According to CNN, when US suppliers began shipping diesel across the Atlantic to take advantage of the price hike, it created shortages in the US, which pushed up prices there as well.

“We're closely monitoring challenges to diesel supply and prices as a result of Putin's invasion,” White House Deputy Press Secretary Emilie Simmons said on Twitter on Monday. “An emergency declaration has been prepared for @POTUS to authorize a release from reserves if necessary. This would bridge short-term supply shortfalls.”

Diesel has hit an all-time average high price in the US, selling at a nationwide average of $5.58 per gallon in the week of May 18, according to the American Automobile Association (AAA). According to AFP, that’s 75% higher than a year ago and 9% higher than a month ago. While most American cars don’t run on diesel, most American trucks and locomotives do, meaning higher diesel prices are likely to transition into higher operation and thus higher consumer costs - a key driver of the record-high inflation plaguing the US.

However, Andy Lipow, president of Lipow Oil Associates, told CNN the release wouldn’t accomplish much.

"It's small potatoes. It might buy a couple of weeks or even months, but it doesn't solve the underlying issues," he said.

By comparison, in March, the Biden administration ordered a massive release of its Strategic Petroleum Reserve of 1 million barrels of oil per day for six months in an attempt to curb rapidly rising petroleum prices, as supply had been very badly impacted by the boycott of Russian products.