US DOE sells one million barrels from the Northeast Gasoline Supply Reserve

The United States Department of Energy awarded contracts for the sale of one million barrels of gasoline from the Northeast Gasoline Supply Reserve, timed to dent regional gasoline prices before the July 4 holiday, as the government moved one step closer to the congressionally mandated closure of the NGSR.

The barrels, equivalent to 42 million gallons of gasoline, were sold at an average price of $2.34/gal. Buyers included BP, George E. Warren, LLC, Vitol, Freepoint Commodities and Irving Oil. The sale price would "ensure gasoline supply flows into local retailers" as more drivers take to the roads for holiday travel, DOE argued in its release, "particularly impacting the states of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, and Pennsylvania."

"The Biden-Harris Administration continues to take strategic action to lower prices for American consumers in every aspect of their lives — especially as summer driving season ramps up," US Secretary of Energy Jennifer Granholm said in a statement. "By releasing this reserve ahead of July 4, we are ensuring sufficient supply flows to the Northeast at a time hardworking Americans need it the most."

Reserve closure in progress

The Biden administration controlled the timing of the sale, which it first announced May 21. Unlike the much larger 2022 releases from the US Strategic Petroleum Reserve, the liquidation of the NGSR into the market was decided by Congress in the 2024 Consolidated Appropriations Act, which mandated the sale of the barrels and the closure of the NGSR.

The NGSR was created in 2014 following Superstorm Sandy's disruptions of gasoline markets, but it had yet to be used. In 2022, the US Government Accountability Office concurred with a 2020 DOE finding that the reserve was too expensive to maintain and too small relative to regional fuel demand to serve its designed purpose. One million barrels was enough to account for just two days of estimated consumption in the region, the GAO said, while maintenance costs were significantly higher than the SPR.

"Officials told us that it would generally take more than one week to release heating oil or gasoline from the product reserves — from the declaration of a severe energy disruption by the president to a competitive sale of the product on the open market," the report said, noting that imported supply was typically capable of reaching the region nearly as quickly as reserve releases.

The gasoline was sold from the NGSR's Port Reading, New Jersey site, which held 900,000 barrels of RBOB gasoline, and the South Portland, Maine site, where 98,824 barrels of CBOB gasoline were kept.

US Atlantic Coast gasoline stocks fell to 55.9 million barrels in the week ended June 21, latest US Energy Information Administration data showed, putting them at roughly par with year-ago levels but still around 10.7% below their five-year average for this time of year.

But gasoline inventories are tighter across the high-demand northeastern states. EIA data shows Central Atlantic stocks at 28 million barrels in the week ended June 21, around 11.5% below average, while New England inventories were 15.3% below normal at 3.6 million barrels during the same period.