What is Home Heating Oil Reserve?
What is the Northern Home Heating Oil Reserve, also simply known as the home heating oil reserve? This is the component of the Strategic Petroleum Reserve that involves home heating oil. Set up in 2000 on the direction of President Bill Clinton, this reserve is in place to prevent any fuel oil disruption in the supply chain. This is important because almost seventy percent of of the homes in the northeast area use heating fuel in the winter for heat. The Home Heating Oil Reserve has the capacity to store two million barrels of home heating oil, to prevent any supply problems that could affect home heating needs. This reserve is in place to hedge against any shortages that could happen in the supply chain because of severe weather occurrences. Two million barrels of heating oil in the Northern Home Heating Oil Reserve would supplement the heating oil supplies for approximately ten days, which is determined to be enough time needed for ships and boats to bring more heating oil in from the Gulf of Mexico all the way to the harbor in New York.
There are guidelines in place to determine when heating oil from the Northern Home Heating Oil Reserve is to be released. In an emergency, or at any time that the barrels of heating oil are removed from the reserve and sold, there are regulations in place to ensure fair competition between companies. An open bidding system is in place that is online and is anonymous during the entire process, until the final bid is accepted. This ensures that no single companies or group of companies receives any special treatment at all in the sale process of this home heating oil. This system has been used just once since the northern home heating oil reserve was established, and that was in 2007. Thirty five thousand barrels of home heating oil were released from the reserve and sold to cover the higher cost of storage contracts for the oil storage, which came due in 2007 and had a significantly increased cost because of storage shortages.
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More and more people around the world are switching to home heating fuel especially with the rising cost of oil and gas heat. Plus, services seem to be more reliable as far as price goes. This is definitely something people need to look into if switching over their heating system.February 1st, 2009 at 12:36 am