Congress Closes Northeast Gasoline Supply Reserve

Last week the US Senate passed a $468 billion bill to fund parts of the federal government through September 20, 2024. The bill includes a provision that would require the Secretary of Energy to first sell one million barrels of refined petroleum product from the Strategic Petroleum Reserve (SPR) and close the Northeast Gasoline Supply Reserve (NGSR). The Department of Energy (DOE) created the NGSR in 2012 following Superstorm Sandy’s catastrophic damage to refineries and terminals in New York harbor. The emergency stockpile serves as an insurance policy for future natural disasters in the northeast like Superstorm Sandy. The reserve holds 700,000 barrels of gasoline in the New York Harbor, 200,000 barrels at a Boston terminal and 100,000 barrels in South Portland, Maine. In the fuel marketing industry, disaster recovery time typically takes 2 to 3 times longer than the duration of the disaster itself. When fuel supply is disrupted, emergency fuel supplies, hours of service waivers and fuel volatility waivers are essential to restore the flow of finished fuel products to downstream users.

Last September, EMA sent a letter to Senate Appropriations Subcommittee on Energy and Water Development urging them to reconsider closing the 1-million-barrel Northeast Gasoline Supply Reserve (NGSR) in the FY 2024 spending bill. Unfortunately, the NGSR closure was on the table again in the draft Consolidated Appropriations Act of 2024. The proceeds from the sale will be deposited into the general fund of the Treasury and then the legislation further directs the Energy Secretary to close the Northeast Gasoline Supply Reserve. In addition, upon closure of the NE reserve, DOE may not establish any new regional petroleum product reserve unless funding for the proposed regional reserve is explicitly requested in advance in the President’s annual budget. Any new proposal must meet requirements such as justification for the new reserve; a cost estimate for the establishment, operation, and maintenance of the reserve; funding sources; a detailed plan for operation of the reserve, including the conditions upon which the products may be released; the location; and the estimate of the total inventory of the reserve.