WASHINGTON -(Dow Jones)- With jet fuel prices soaring, U.S. airlines have asked Energy Secretary Samuel Bodman to tap into home heating oil reserves to help take pressure off squeezed fuel supplies.

The Air Transport Association, which represents the largest U.S. airlines, says a decision by the Bush administration to release supplies from the Northeast Home Heating Oil Reserve, would ease the price of jet fuel.

"While admittedly not the panacea to our energy crisis, making the Heating Oil Reserve available to the commercial market would yield immediate, tangible benefits for residential consumers of heating oil as well as the nation's airlines and their customers," ATA President James May wrote in a March 19 letter to Bodman.

Home heating oil and jet fuel have similar chemical properties, and the supply of both is limited by refiners' capacity to produce so-called distillate fuels, energy experts say.

In addition, jet fuel contracts commonly use heating oil as a reference price, according to John Heimlich, chief economist at ATA.

Airlines have seen jet fuel prices soar 30% since January and 70% over this time last year. They are looking for any lever to ease that burden, which threatens to push many airlines into the red after recent years of profitability.

But DOE so far appears unlikely to come to the airlines' aid.

"While we continue to monitor available supplies in the Northeast, the heating oil season is considered to end in mid-March and current conditions do not warrant a 'severe dislocation in the heating oil market' that would warrant a release," DOE spokeswoman Megan Barnett said Thursday.

The 2 million barrel Northeast Home Heating Oil Reserve was created in 2000 as an emergency back-up against supply disruptions in the cold winter months. The " severe dislocation" referred to by Barnett is defined by very strict criteria in the law in terms of heating oil prices relative to the price of crude.

But the law also gives the president discretion to open up the reserve in case of a "regional supply shortage of significant scope and duration."

Heating oil retailers, also feeling the effects of the price spike, asked the Bush administration separately in a letter last week to release supplies from the Northeast reserve.

Sens. Olympia Snowe, R-Maine, and Christopher Dodd, D-Conn., have proposed giving the president more flexibility to open up the reserve.

But a spokesman for Snowe added that, "The reserve was not created to alleviate a commercial industry's burden, but to ensure that the people who need it most will have the ability to heat their homes."

Larry Goldstein, director of the Energy Policy Research Foundation Inc., agreed that the airlines' request is "anathema to the intent" of the reserve, set up to protect Northeast residents against a catastrophic mid-winter fuel shortage.

But Goldstein said the administration and Congress must look at various options to correct what he called an "imbalance" between refining capacity and demand for distillate fuels, including by using the heating oil reserve.

"It's something that they at least ought to seriously consider, because these are not normal times," he said in an interview.

ATA members include AMR Corp.'s (AMR) American Airlines, Continental Airlines Inc. (CAL), Delta Air Lines Inc. (DAL), Northwest Airlines Corp. (NWA), and UAL Corp.'s (UAUA) United Airlines, among others.

-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@ dowjones.com

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  03-27-08 1433ET
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