US Pres. Bill Clinton has ordered the Department of Energy to establish a temporary 2 million bbl northeastern US home heating oil reserve by October.
Clinton said, "Winter may seem far off on this hot day, but if we don't do something now, reserve stocks of heating oil may not be in place before the cold weather comes. This action will leave us far better prepared to face the winter months."
The New England states experienced a heating oil price spike last January, and the US Energy Information Administration warned again last week that low distillate stocks could cause more price jumps next winter.
Clinton also urged Congress to reauthorize the Energy Policy and Conservation Act, which authorizes operation of the Strategic Petroleum Reserve. In that bill, he said, Congress should authorize a permanent Northeast heating oil reserve with appropriate criteria for its use.
The White House says DOE has legal authority to create an interim stockpile. Within 2 weeks, through the Defense Energy Supply Center, DOE will solicit offers to swap SPR crude from the West Hackberry, La., site for heating oil.
Bidders will supply the distillate as well as transportation and interim storage facilities. Contracts will be awarded to companies offering the best exchange value for the SPR crude.
Energy Sec. Bill Richardson said, "Even on an accelerated timetable, it will take several weeks before winning companies will be able to arrange for storage facilities and acquire the heating oil. That meant we had to act before the end of this month or put many Americans at risk of running short of heating oil this winter."
The White House said DOE could have created a permanent reserve under current law if it amended its SPR operating plan, but that would have required a 60-day comment period. It said the secretary of energy has full authority to obtain crude or refined products for the SPR and place them in interim storage as he deems appropriate.
Richardson also will ask Congress to approve amending the SPR plan to allow permanent storage of home heating oil.