PUMP PANIC: Biden prepares to tap diesel reserve as pressure mounts to bring prices down
as a result of strong consumer demand, trillions in government stimulus and disruptions in the global supply chain. The Russian war in Ukraine has also magnified the problem: Diesel inventories in the Northeast have plunged to record lows in recent weeks in part because of the conflict.
Distillate fuel inventories have plunged and are about 23% below the five-year average for this time of year, according to a recent Energy Information Administration report. Nationwide, distillate inventories, which include diesel, fell to their lowest level since 2008, while the East Coast has seen storage fall to the lowest level on record. Alarmed by the drop in inventories in the Northeast and rising prices, the Biden team started conducting internal briefings and consulted with fuel retailers, as well as, to better understand the situation, the White House official said. The Northeast Home Heating Oil Reserve, which was created in 2005, consists of about 1 million barrels of diesel, roughly a day's worth of supply in the region. The reserve has only been tapped once before, in the aftermath of Hurricane Sandy in 2012. The White House official said the Biden team understands tapping the reserve may not substantially reduce diesel prices, but could prevent spot outages that would be "highly disruptive to families and businesses." By comparison, the White House has already tapped the nation's stockpile of emergency oil, called the Strategic Petroleum Reserve, several times to help reduce rising energy prices. The reserve currently contains 420 million barrels of crude oil, even after the recent releases. The rising cost of diesel is threatening to exacerbate already sky-high inflation for most goods and services at a time when Americans can ill afford it. The Labor Department reported earlier this month that consumer prices soared 8.3% in April, close to a 40-year high and far faster than economists expected. It emphasized how strong inflationary pressures in the economy still are, despite hopes that consumer prices could peak soon. Rising inflation is eating away at strong wage gains that American workers have seen in recent months: Real average hourly earnings decreased 0.1% in April from the previous month, as the inflation increase eroded the 0.3% total wage gain, according to the Labor Department. On an annual basis, real earnings actually dropped 2.6% in April.
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