Is DOE Eyeing More Regional Gas Reserves?

Secretary cites cyberattacks, terrorism, climate change as additional risks

Department of Energy Secretary Ernest Moniz (CSP Daily News / Convenience Stores / Gas Stations)

Ernest Moniz

WASHINGTON -- The Department of Energy (DOE) may be looking into opening more regional gasoline reserves to help cover fuel supply disruptions during weather events and other emergencies, according to a report in The Washington Times.

Last month, the first regional gasoline reserve went online in New York State to serve the Northeast, in reaction to the gasoline shortages that plagued New York and New Jersey during Superstorm Sandy in 2012.

Located at Northville Industries' terminal in Suffolk County, the reserve contains nearly three million gallons of gasoline. During an emergency, the government would sell fuel from the reserve to distributors at market prices; distributors would then supply emergency responders, government clients and retail gas outlets.

After the Obama administration announced plans for the Northeast gasoline reserve earlier this spring, DOE secretary Ernest Moniz said that the department was reviewing internally whether the country needed additional regional reserves in other areas of the country where weather could wreak havoc on supply.

Secretary Moniz and the Obama administration, as well as some legislators, believe the gasoline reserve is a required update of the law that first established the SPR in the 1970s, designed to release oil during major crude supply disruptions that could threaten the economy. Moniz said he believes the laws establishing the SPR should be further updated to deal with energy security risks from cyberattacks, terrorism and climate change, in addition to geopolitical turmoil, and believes the SPR's structure should be revisited.

Some experts suggested the Obama administration is acting on precedent set in the George W. Bush years to tap the SPR more frequently to alleviate domestic emergencies, the report said. Bush had authorized releases of crude from the reserve after several Gulf Coast hurricanes in the 2000s. This, they contend, would give President Obama a basis to build more regional gasoline reserves.

Some in the gasoline industry view the gasoline reserve as an example of governmental interference, however, and puts the federal government in competition with the private sector, said the report.

The newspaper also cited an analysis by ClearView Energy Partners suggesting that the regional gasoline reserves could drive down private stockpiles of the fuel. Northeast refiners have nearly 54 million barrels in gasoline stocks, the Times said, which provides 24.4 days of supply that could shrink if the DOE opens more federal reserves. The DOE countered, however, that the regional gasoline reserve is meant only to store enough fuel to cover the area during an emergency and is not meant to replace private reserves or refineries' backup supplies.

Click here to read the full Washington Times report.