(Updates with comment from Schumer in sixth paragraph.)
May 2 (Bloomberg) -- The U.S. Energy Department said it will create a new reserve to stockpile 1 million barrels of gasoline at two Northeast U.S. locations to prevent the type of shortages that occurred after Superstorm Sandy in 2012.
The refined petroleum product reserve will provide gasoline within 24 hours of extreme weather events such as hurricanes, tidal surges, and snow and icing conditions, Energy Secretary Ernest Moniz said today on a conference call with reporters. Damage to refineries and storage terminals after Superstorm Sandy left many New York and New Jersey gas stations without fuel for as long as 30 days.
The reserve is expected to cost $200 million, depending on the price of gasoline and the cost of leasing commercial storage tanks. The two locations, one near New York Harbor and the other in Boston, are designed to provide short-term relief to consumers, businesses and first responders.
“The president’s climate-action plan called on the Department of Energy to better prepare for the effects of climate change,” Moniz said. “This reserve is a step toward preventing another Sandy situation with regard to fuel.”
The goal is to launch the gasoline reserve by late summer. It will complement the Northeast Home Heating Oil Reserve, a 1 million barrel supply of diesel fuel that was used for the first time after Sandy to supply first responders and emergency generators.
The gasoline shortage after Sandy “delivered a gut punch to the region’s economy,” U.S. Senator Charles Schumer, a New York Democrat, said. “We were in a desperate search of gasoline to run emergency generators and to drive to work. People couldn’t get anywhere. They couldn’t get the bare necessities of life.”
Gasoline from the reserve will be distributed primarily by truck, Moniz said. The reserve will be used to offset supply disruptions under guidelines similar to those established for the Strategic Petroleum Reserve.