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1 1 (August 30, 2022)

handle is hein.crs/goveirj0001 and id is 1 raw text is: N Congressional Research Service nformingqh leg iltive debate since 1914 Northeast Home Heating Oil Reserve August 30, 2022 In response to rising retail heating oil prices during the winter of 1999-2000 (see Figure 1), the Northeast Home Heating Oil Reserve (NEHHOR) was created and authorized by presidential directive and enacted legislation (P.L. 106-469). The reserve was formally established in March 2001. As defined in 42 USC §§6250 et seq., Northeast states include Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, and New Jersey. Today, the NEHHOR consists of approximately 1 million barrels-42 million gallons-of ultra-low sulfur distillate (ULSD) fuel held in commercial storage facilities. ULSD has multiple uses, to include heating, transportation, and electricity generation. Administered by the Department of Energy (DOE), the NEHHOR is not part of the Strategic Petroleum Reserve (SPR) and operates under specific authorities intended to address regional heating oil supply interruptions and price dislocations. Figure 1. Retail Heating Oil Prices (Nominal) Selected Northeast Home Heating Oil Reserve Events $/gallon $6 2912 2 $4Energeny Loan $2 - 2000 2005 2010 2015 2020 Monthly Jan 1999-June2022. Source: CRS, price data from the U.S. Energy Information Administration Notes: To date, the only Northeast Home Heating Oil Reserve emergency release was for Hurricane Sandy relief efforts in 2012. Background and Establishment Residents in Northeastern states are major consumers of distillate fuel oil, which is often used for space heating. During the winter season of 1999-2000, approximately 78% of the nearly 6 billion gallons of distillate sold to U.S. residents were delivered to Northeast customers. Following a near doubling of retail heating oil prices between February 1999 and February 2000, the Administration and Congress acted to establish and authorize a government- controlled heating oil reserve containing no more than 2 million barrels, or 84 million gallons. In July 2000, President Clinton directed the Secretary of Energy to establish a 2-million-barrel home heating oil reserve in the Northeast. Using SPR acquisition authorities, the Administration executed transactions to exchange SPR crude oil for heating oil products and to lease commercial storage capacity in the Northeast region. In part to provide release authority that could be responsive to regional heating oil supply shortages and interruptions, Congress formally authorized the NEHHOR through passage of the Energy Act of 2000 (P.L. 106-469). In 2011, DOE sold all heating oil barrels in the NEHHOR-approximately 2 million at that time-and allowed storage contracts to expire. Sale proceeds were used to acquire approximately 1 million barrels of ULSD, and new commercial storage contracts were established. Further, Congress enacted legislation in 2011 (P.L. 112-74) that limits NEHHOR inventories to no more than 1 million barrels of petroleum distillate. Conversion of NEHHOR inventory was motivated by laws, regulations, and standards requiring the use of low sulfur fuels. NEHHOR barrels are currently held in storage terminals located in Connecticut, Massachusetts, and New Jersey (see Table 1). Table 1. Northeast Home Heating Oil Reserve Storage locations and volumes Terminal Operator Location Barrels Buckeye Partners Port Reading, NJ 300,000 Buckeye Partners Groton, CT 300,000 Global Companies Revere, MA 201,000 Gulf Oil Chelsea, MA 200,000 Total 1,001,000 Source: U.S. Energy Information Administration Notes: As of August 2022. NEHHOR Release Authorities Releasing barrels from the NEHHOR requires a presidential finding that a severe energy supply interruption exists. Such a finding is predicated on one of two conditions: (1) a heating oil market dislocation resulted from the supply interruption, or (2) any other circumstance that constitutes a regional supply shortage that could be alleviated by an NEHHOR release. Market Dislocation For the purpose of a severe energy supply interruption finding, existence of a dislocation in the heating oil market is based on two specific criteria. First, the difference in price between retail heating oil and crude oil increases by more than 60% compared with the average price differential observed during the five previous heating oil seasons (October through March), and continues for seven

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