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President Clinton Directs Department of Energy to Establish A Home Heating Oil Reserve in the Northeast

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National Economic Council

President Clinton Directs Department of Energy to Establish A
Home Heating Oil Reserve in the Northeast to Protect Against Shortages

July 10, 2000


President Clinton today directed Secretary of Energy Bill Richardson to establish a home heating oil reserve in the Northeast. The regional heating oil is intended to reduce the risks presented by home heating oil shortages, such as the one that occurred last winter. He also renewed his call for Congress to reauthorize the Energy Policy and Conservation Act, which authorizes operation of the Strategic Petroleum Reserve (SPR), and to authorize the establishment and operation of a permanent heating oil reserve in the Northeast with appropriate criteria for its use. These, and other important steps such as the Federal Trade Commission investigation of gasoline prices in the Midwest, are critical steps towards reducing energy costs for American families and businesses. The President also called on Congress, once again, to enact key parts of his comprehensive energy strategy, including his energy tax and investment packages and comprehensive electricity restructuring legislation.

President Clinton is Acting Now to Establish this Reserve So That Heating Oil Is in Place Before Winter: Since March 18th, President Clinton has repeatedly called on Congress to authorize the creation of a home heating oil reserve in the Northeast with a trigger designed to address possible supply shortages in the region. Despite the President's concern about protecting the citizens of the region from possible heating oil shortages, Congress has not yet authorized the creation of a heating oil reserve with an appropriate trigger. Therefore, in order to reduce the risk of heating oil supply shortages next winter, President Clinton is directing Secretary Richardson to take concrete steps under current law to store heating oil in the Northeast so that oil can be in place as soon as possible.

Department of Energy to Begin Process of Obtaining 2 Million Barrels of Home Heating Oil to Store in the Northeast: DOE will take two steps towards the establishment of a permanent Northeast heating oil reserve.

  • First, using existing legal authority, DOE will initiate an exchange of crude oil from the Strategic Petroleum Reserve (SPR) for 2 million barrels of home heating oil stocks and interim storage facilities in the Northeast. By beginning the process under current law of obtaining home heating oil for storage in interim facilities, the Department will avoid a 60 day delay required to amend the SPR Plan (the operating guidelines for the SPR) to allow for the permanent establishment of home heating oil reserve.
  • Second, Secretary Richardson will submit to Congress an amendment to the SPR Plan allowing for the permanent establishment of a 2 million barrel reserve of home heating oil in the Northeast. The Plan amendment will become effective after 60 days.

The Secretary currently has the legal authority to obtain both crude oil and refined product for the reserve, and to store these products in interim storage facilities, as he deems appropriate. Once the SPR plan amendment becomes effective, the Department will be authorized to store home heating oil in the Northeast on a permanent basis instead of the interim basis permitted under current law and the current SPR plan, as amended.

Department of Energy Will Obtain Heating Oil Through Exchange of SPR Crude Oil: DOE will use existing authority to obtain heating oil to store in the Northeast. Specifically,

  • DOE, through an agent, will solicit offers from the private sector to exchange crude oil from the SPR for to 2 million barrels of heating oil, transportation, and the necessary interim storage facilities.
  • Companies wanting to participate in the exchange must provide and transport the heating oil to the Northeast, and have stocks in place in October or as soon thereafter as possible.
  • Contracts will be awarded to those companies that offer the best exchange value for the SPR crude oil.

President Calls on Congress to Permanently Establish a Home Heating Oil Reserve and to Enact Other Key Parts of His Energy Policy: President Clinton directed this action to ensure that the home heating oil stocks are in place before winter. He renewed his call for Congress to authorize permanently a home heating oil reserve with an appropriate trigger, because even after the SPR plan amendment takes effect, the release of heating oil will remain governed by current law. The President believes, however, that a permanent home heating oil reserve in the Northeast needs a trigger for its use that is more appropriate to possible regional shortages than current law permits. Congress must also pass the President's energy tax package and budget initiatives, which would help families and businesses buy fuel-saving cars, energy efficient homes, buildings, and appliances, would accelerate the research and development of cleaner, more efficient energy technology and his comprehensive electricity restructuring legislation, in order to ensure that America has a secure energy future for the 21st century.


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