Skip to content

Granholm’s Call to Build US Fuel Stockpiles Is a Losing Proposition

  • New England fuel stockpiles are half of last year’s levels
  • Lack of fuel supply puts Northeast winter heating at risk
Jennifer Granholm

Jennifer Granholm

Photographer: Oliver Contreras/Bloomberg

US Energy Secretary Jennifer Granholm’s call on fuel suppliers to build inventories has just one problem: It’s a losing proposition.

Diesel futures in New York are trading in the widest backwardation for this time of year in data going back to 2008. A backwardated market is one where prompt deliveries are priced at a premium over future deliveries, meaning the product in storage is losing value each day. More often than not, the diesel market is in contango for this time of year, assuring the product gains value over time.