The Trump administration is offering to loan up to nearly a third of the 1-million-barrel US emergency heating oil reserve, the Department of Energy said on Wednesday, in a bid to tame prices, which have surged on diesel shortages due to the wars in Iran and Ukraine.
The move, reported first by Reuters, came after senators from both political parties urged the administration to release heating oil from the reserve as prices for diesel, a fuel from the same refining stream, hit records above $6.50 per gallon on disruptions across the Middle East caused by the Iran war.
The administration will evaluate whether further releases from the reserve are necessary, a source at the department said.
The US has only tapped the Northeast Home Heating Oil Reserve once since Hurricane Sandy struck the region in 2012. The emergency stockpile is held at sites in New Jersey, Connecticut, Massachusetts and Maine.
About one-third of New England homes use heating oil and about half in Maine.
Soaring heating oil costs have emerged as a key issue ahead of the November 3 elections, including in several tight Senate races, as Trump's fellow Republicans are trying to maintain control of the two chambers of Congress.
Maine Republican Senator Susan Collins is facing a tough reelection fight, while New Hampshire's open Senate seat is a toss-up between Democrat Chris Pappas and Republican John Sununu. In Alaska, Republican Senator Dan Sullivan is facing a challenge from Democrat Mary Peltola.
US Energy Secretary Chris Wright said the administration was "committed to doing everything in our power to lower energy costs." The department said there would be a competitive bidding process for the loans for both fuel retailers and terminal holders to allow the fuel to flow into areas facing shortages.
The administration is also backing the Williams Companies' Constitution natural gas pipeline project, which would ship natural gas produced in Pennsylvania to heat homes in New York and New England. This week, the US released up to $42 million in Cold War-era Defense Production Act funding for initial work on Constitution. New York has blocked the project on environmental grounds.
The department will loan up to 315,000 barrels of heating oil from Maine, Massachusetts and Connecticut, it said. Deliveries are set to be completed by November 13.
The Trump administration is also struggling to control crude oil prices that have risen from the Iran war and has already agreed to loan 172 million barrels of crude from the Strategic Petroleum Reserve. Levels in that emergency stockpile, held on the coasts of Texas and Louisiana, are at their lowest since 1982.