US to loan about a third of heating oil reserve in bid to tame prices

WASHINGTON, Nov 4 (Reuters) – The US Energy Department said on Wednesday it would loan 300,000 barrels of fuel oil to four companies from the nation’s emergency heating oil reserve in an effort to counter surging prices before the onset of winter. 

The offer, reported first by Reuters, came after senators from both political parties urged the administration to release heating oil from the reserve as prices of diesel, a fuel from the same refining stream, hit records above $6.50 per gallon on energy disruption across the Middle East caused by the Iran war. 

The amount of fuel to be loaned amounts to nearly a third of the 1-million-barrel US emergency heating oil reserve.

Fuel from the Northeast Home Heating Oil Reserve will be drawn from storage sites in Boston and New Haven with transfers or deliveries scheduled to be completed by November 6, the Energy Department said. 

“These actions will help address supply chain disruptions and ensure Americans in the Northeast region stay warm while protecting the long-term readiness of the Northeast Home Heating Oil Reserve,” Energy Department Under Secretary Kyle Haustveit said in a statement announcing the loan.  

According to the contracts, the companies, Global Companies LLC, Sprague Operating Resources LLC, Trafigura Trading LLC and Vitol Inc, will be required to return the same amount of fuel oil with an additional premium to ensure the reserve is refilled before next year’s peak heating season, the department said.   

The US has only tapped the Northeast Home Heating Oil Reserve once since Hurricane Sandy struck the region in 2012. The emergency stockpile is held at sites in New Jersey, Connecticut, Massachusetts and Maine. 

About one-third ​of New England homes use heating oil and about half in Maine.

(Reporting by Katharine Jackson and Timothy Gardner; Editing by Kirsten Donovan)

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