Northeast Home Heating Oil Reserve - Profile
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| The Northeast Home Heating Oil Reserve has 2 million barrels of emergency fuel stocks stored at commercial tank farms. | | Of the 7.7 million households in the United States that use heating oil to heat their homes, 5.3 million households or roughly 69 percent reside in the Northeast region of the country - making this area especially vulnerable to fuel oil disruptions.
On July 10, 2000, President Clinton directed Energy Secretary Bill Richardson to establish a 2-million-barrel home heating oil component of the Strategic Petroleum Reserve in the Northeast. The intent was to create a buffer large enough to allow commercial companies to compensate for interruptions in supply or severe winter weather, but not so large as to dissuade suppliers from responding to increasing prices as a sign that more supply is needed.
Two million barrels would give Northeast consumers adequate supplies for approximately 10 days, the time required for ships to carry heating oil from the Gulf of Mexico to New York Harbor.
Immediately after the President's July 10, 2000, directive, the Energy Department, acting through the Defense Energy Support Center, issued a solicitation to exchange crude oil from the Strategic Petroleum Reserve for two million barrels of distillate heating oil stocks and for storage facilities in the Northeast.
An exchange using Strategic Petroleum Reserve crude oil was chosen because no appropriated funding was available to create the heating oil reserve.
Heating Oil Storage Terminals
| Terminal |
Location |
Inventory |
Amerada Hess Corp.
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Woodbridge, NJ
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1,000,000 bbls
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| Magellan Midstream Partners, L.P. |
New Haven, CT
|
500,000 bbls
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Motiva Enterprises
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New Haven, CT
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250,000 bbls
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Motiva Enterprises
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Providence, RI
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250,000 bbls
| | On July 19, 2000, the Defense Energy Support Center, issued a solicitation to companies willing to provide the storage tanks, heating stocks, or a combination. Contracts were awarded on August 17, 2000 for two million barrels of storage tank capacity in New Haven, Connecticut and in Woodbridge, New Jersey, on the New York Harbor. On August 29, 2000, the Energy Department announced contracts with Equiva Trading Co. and Morgan Stanley Capital Group to provide the two million barrels of heating oil.
By October 13, 2000, all of the heating oil had been delivered. In November 2000, Congress amended the Energy Policy and Conservation Act of 2000 providing clear authority for the reserve.
As Americans confronted the winter of 2000-01, the Northeast Home Heating Oil Reserve was deemed ready.
The Bush Administration Endorses the Reserve
Although heating oil shortages never materialized during the 2000-01 winter, the existence of the Northeast Home Heating Oil Reserve provided an important safety cushion for millions of Americans.
Recognizing this, the incoming administration of George W. Bush reinforced the value of the Reserve. On March 6, 2001, Energy Secretary Spencer Abraham formally notified Congress that the Bush Administration would establish the Reserve as a permanent part of America's energy readiness effort, separate from the Strategic Petroleum Reserve.
In May 2001 President Bush issued his National Energy Policy which again endorsed the Reserve as a way to help ensure adequate supplies of heating oil in the event of colder than normal winters.
The Reserve Adds a New Storage Terminal
On August 6, 2001, the Energy Department announced that Energy Secretary Abraham had approved the relocation of 150,000 barrels of the emergency heating oil inventory to the Motiva Terminal in Providence, Rhode Island. In the agency's agreement with Equiva Trading Co., the Providence stocks could be expanded to 250,000 barrels in the future.
"Stockpiling a portion of our heating oil inventory in Providence gives us a third geographic location from which we can distribute fuel to homeowners and businesses in the event of a supply shortage," Abraham said. "Providence is especially advantageous because it extends our distribution capabilities into the Boston area and gives us additional truck and marine loading options."
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