Of the 7.7 million households in the United States that use heating oil to heat their homes, 5.3 million households or nearly 70 percent reside in the Northeast region of the country - making this area especially vulnerable to fuel oil disruptions.   

History

On July 10, 2000, President Clinton directed Energy Secretary Bill Richardson to establish a two 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 during 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 supplemental supplies for approximately 10 days, the time required for ships to carry additional 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 to place in leased 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.

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.   

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 2000-2001, the Northeast Home Heating Oil Reserve was deemed ready.

The Bush Administration Endorses the Reserve

Although heating oil shortages never materialized during the 2000-2001 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 Home Heating Oil Reserve Today 

Heating Oil Storage Terminals Terminal     Location      Inventory  Amerada Hess Corp. (2 locations)   Perth Amboy, NJ Groton, CT   984,253 bbls 250,000 Morgan Stanley New Haven, CT 750,000 bbls

Storage contracts for the first several years of operation expired on September 30, 2007, and new contracts became effective on October 1, 2007.

The current storage contracts are for two million barrels of heating oil, although current inventory stands at 1,984,253 barrels.

During June 2007, the Department of Energy sold 35,000 of its two million barrel reserve in order to supplement available to cover the costs of the new storage contracts. Storage costs under the new contracts were significantly higher than the expiring contracts due to market changes in product

MORE INFO Read the DOE annnouncement of sale Read the DOE announcement to repurchase heating oil

storage that significantly reduced the available commercial storage capacity.  The sale was the first use of the on-line open bidding system that was developed for drawdown of the heating oil reserve.

In August 2008 DOE repurchased 19,253 barrels of heating oil using $3 million of appropriated funds, taking the inventory to 1,984,253 barrels.