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White House weighs future release of emergency heating and crude oil stocks as winter approaches

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An aerial view of the Bryan Mound Strategic Petroleum Storage Facility on October 19, 2022 in Freeport, Texas. The head of the International Energy Agency (IEA), Fatih Birol, said that the main victims of high energy prices are not the USA or Europe, but developing countries.

Brandon Bell | Getty Images News | Getty Images

The Biden administration is considering tapping into additional heating and crude oil supplies as winter approaches and market price uncertainty worsens, according to four people familiar with the matter.

The U.S. currently stores about 1 million barrels of fuel oil — a form of diesel fuel used primarily to heat homes — at three commercially leased sites in New York and Connecticut. According to two sources familiar with the matter, the White House is considering whether to call on Congress to increase the storage limit, potentially doubling it, to create additional reserves that the administration could release if supplies dwindle or prices rise again, according to two sources familiar with the matter.

“Despite the improvement, the industry’s fuel inventories remain below average, and the administration continues to engage with the industry to ask them to increase fuel inventories,” the Department of Energy said in a statement to CNBC. “The administration continues to work with lawmakers and industry to identify all options that can help American consumers.”

According to the Energy Information Administration, industrial heating oil inventories have risen slightly in recent weeks and are now about 10% below their five-year average. But in connection with the jump in fuel oil prices by 54% over the last year, any shortfall in supply can cause headaches for consumers.

Crude oil, meanwhile, fell to prices last seen in early 2022 before Russia invaded Ukraine, leading to speculation that the administration could move to replenish stocks, which make up half of the total capacity of the Strategic Petroleum Reserve, the lowest level since mid- 1980s.

But the White House is bracing for a potential spike in prices as Europe’s oil embargo and G7 price caps on Russian crude could disrupt supplies when they take effect next week. Two senior administration officials say the option to release more oil from reserves in early 2023 remains open.

“I think we want to make sure we’re taking the right steps in a measured way,” said Amas Hochstein, the president’s senior energy adviser. Joe Bidensaid on CNBC”Squawk Box“. “The goal has been consistent – to have prices that are fair to the industry, but also fair to consumers.”

The White House could face additional pressure from the Republican-led House of Representatives to replenish the strategic oil stockpile when the new Congress begins its session in January. In June, leading Republicans on the House Energy and Commerce Committee suggested that a drop in the strategic oil stockpile was a national security risk.

“It is imperative that the Department of Energy maintain the nation’s oil reserves in a way that does not limit our ability to prevent or mitigate the negative effects of real energy shortages,” wrote Reps. Cathy McMorris Rogers, R-Wash., and Rep. Fred. Upton, R-Mich.

The White House has said it plans to replenish strategic oil reserves when prices are between $67 and $72 a barrel, and hopes to sign fixed-price contracts with producers by the end of 2023.

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