The Trump administration announced on 21 October that it will loan approximately 315,000 barrels — nearly a third — of the 1-million-barrel Northeast Home Heating Oil Reserve to ease record fuel prices driven by supply disruptions stemming from the Iran war, with deliveries to be completed by 13 November 2026. The Energy Department said it would release the fuel from storage facilities in Maine, Massachusetts and Connecticut through a competitive bidding process open to both fuel retailers and terminal holders, allowing supply to flow into areas facing shortages. Energy Secretary Chris Wright described the action as 'a temporary measure to solve a temporary supply disruption' and said the administration was 'committed to doing everything in our power to lower energy costs' [Source: Reuters]. The department added that it would evaluate whether further releases are necessary.
The release comes as diesel prices have hit records above $6.50 per gallon on disruptions across the Middle East caused by the Iran war, with the national average sitting at approximately $6.32 a gallon according to AAA [Source: Bloomberg via Rigzone]. In Maine, retail heating oil prices range from $5.50 to $6.30 per gallon, and the statewide average residential heating oil price reached $5.77 per gallon as of 14 September, 74% higher than a year earlier, according to the Maine Department of Energy Resources [Source: ABC News via Yahoo]. US supplies of distillate fuel are at their lowest ever levels for this time of year, and on the East Coast, where the vast majority of demand for heating oil occurs, stockpiles are just off their lowest ever levels [Source: Bloomberg]. Distillate inventories in the week ending 2 October stood at 105,138 thousand barrels, down 42 thousand barrels from the prior week, according to Valdrans data drawing on EIA figures.
The National Energy Assistance Directors Association projected heating oil costs would rise 31.3% this winter, with the average household using heating oil spending about $2,297, up from $1,749 last winter [Source: The Hill]. About 4% of the nation's households use heating oil, concentrated in states including Maine, New Hampshire and Alaska. The move followed pressure from both parties on Capitol Hill: senators Susan Collins and Angus King wrote to Trump in September requesting the release of heating oil from the reserve to protect Maine residents, and senators from both political parties had urged the administration to act as prices climbed.
The Northeast Home Heating Oil Reserve was created under former President Bill Clinton and is designed to provide the Northeast roughly 10 days of supply — approximately the time it takes for ships to carry additional heating oil from the Gulf of Mexico to New York Harbor [Source: Bloomberg via Rigzone]. Wednesday's action marks only the second time the reserve has been tapped since its creation 26 years ago; it was previously used in the aftermath of Hurricane Sandy in 2012 to supply fuel for emergency responders in New York and New Jersey. The reserve's 1-million-barrel capacity represents less than 1% of the 108 million barrels of diesel and diesel-like fuels held in commercial US storage, according to Energy Information Administration data [Source: Bloomberg]. The release is one of several measures the administration has pursued: Trump signed an executive order on 6 October expanding access to tax-exempt red-dyed diesel, and G7 countries agreed in early October to release 100 million barrels of crude and diesel from reserves. The Iran conflict, which began on 28 February with a joint US-Israeli attack, sharply disrupted tanker traffic through the Strait of Hormuz, sending crude oil from roughly $72 a barrel before the conflict to above $100 per barrel.
Sources: Bloomberg, Reuters, Bangor Daily News, The Hill, ABC News, Valdrans Data