The 2 million-barrel Northeast Home Heating Oil Reserve, created in 2000, is operated by the Energy Department. The Secretary of Energy has authority to release oil into the market to offset sharp price spikes or severe shortages.
"Two years ago, a number of Senators and I joined in creating this reserve for just such an occasion: high energy prices, a dramatic energy shortfall, extremely cold weather, a disruption of our foreign oil supply, and a generally unstable energy market," said Senator Collins. "If ever there were a time to open the Northeast Home Heating Oil Reserve, it is now."
Residential heating fuel prices have risen 27.9 cents per gallon since October 2002 and are 37.2 cents per gallon higher than last year at this time. The average cost is now $1.53 per gallon. A number of international and domestic factors are contributing to the higher costs. The prospect of war with Iraq, the prolonged strike in Venezuela, increased demand for heating oil due to the cold winter, and low distillate fuel oil inventories are significantly impacting the price of heating oil.
January''s cold temperatures caused a surge in fuel demand in the Northeast. Demand rose to 4.9 million barrels per day for the last week of the month – the highest weekly average ever. Within the New England region, fuel inventories plunged more than 30 percent, dropping from 8.1 million barrels to 5.6 million barrels during the month of January.
In a letter to the President, Collins and Reed wrote, "There is currently a dangerous shortage of petroleum in the region. The combination of shortage in the region, low oil inventories throughout the nation and prolonged cold weather significantly raises the probability for severe price spikes in the coming weeks unless the Administration takes action immediately."
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