US to sell off strategic petrol reserves in northeast

Full tank: Motor vehicle traffic moves along the Interstate 76 highway in Philadelphia. By strategically releasing the reserves, the government is ensuring a sufficient supply at a time Americans need it the most, Granholm says. — Bloomberg

WASHINGTON: The US Department of Energy says that it will sell off a million barrels of petrol from a small strategic reserve in the northeast, paving the way for its closure.

The administration of President Joe Biden painted the move as one that would lower petrol prices ahead of the summer season, when millions of Americans travel the country by car.

“By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state and northeast at a time hardworking Americans need it the most,” US Energy Secretary Jennifer Granholm said in a statement.

Speaking outside a Manhattan courtroom, Donald Trump, who is on trial for allegedly covering up hush money paid to a porn star in 2016 to hide an illicit encounter, denounced the move as a political ploy by Biden to shore up votes ahead of November’s presidential election.

However, the release of a million barrels of petrol from the Northeast Petrol Supply Reserve is likely to have little real impact on prices, given the US consumed roughly nine million barrels of petrol every day last year, on average, according to the US Energy Information Administration.

The sale of a million barrels of oil from the reserve was required as part of a bill signed into law earlier this year to fund the Department of Energy for the 2024 financial year, which runs until Sept 30.

It requires the department to deposit the proceeds from the sale of the petrol into the treasury, and then to close the reserve down.

The reserve was set up by then-president Barack Obama in 2014 to try to avoid the sort of petrol supply issues that arose after Hurricane Sandy swept through the northeast of the country in 2012.

But the reserve, which only holds a million barrels of petrol, has never been used, and in 2022, the nonpartisan Government Accountability Office criticised its exorbitant annual cost to maintain in comparison to other US crude oil reserves.

The reserve is dwarfed in size by America’s gargantuan Strategic Petroleum Reserve, which currently holds almost 370 million barrels of oil, according to recently published data from the Department of Energy. — AFP