Biden blasts oil refiners for record profits on pain at the pump -Breaking
By Trevor Hunnicutt and Jarrett Renshaw
WASHINGTON, (Reuters) – President Joe Biden demanded Wednesday that oil refiners explain to him why they don’t put more gasoline on the markets. He is under increasing pressure from high prices for gasoline.
Biden addressed an email to Marathon Petroleum Corp executives (NYSE: Valero Energy Corp (NYSE: Exxon Mobil Corp (NYSE:), and complained they had cut back on oil refining to pad profits, according to a copy of the letter https://docsend.com/view/qpg3e8a2s3fbxi3a seen by Reuters.
Phillips 66 (NYSE 🙂 also received the letter. Chevron Corp (NYSE -), BP(NYSE –) and Shell (LON -), a White House official told Reuters.
Biden said that in a wartime, the margins of refineries profit well beyond normal were passed onto American families and was not acceptable. He also noted that the absence of refining caused gas prices to rise faster than oil.
Biden stated that the inaction of the oil industry is hampering efforts by the Administration to mitigate the effects of Russia’s oil-rich invasion of Ukraine. This includes releasing oil from America’s reserves, and increasing gasoline ethanol.
The invasion has brought huge profits to energy companies, driving crude oil prices over $100/barrel. Despite record-high gasoline prices, the fuel demand has not declined.
Karine Jean-Pierre, White House spokesperson said that refiners have a “patriotic obligation” to raise supplies and reduce costs.
She said to reporters, “We’re asking them to stand up for the truth and be patriotic here.”
In April 2020 the U.S. refining capacities peaked at 19.9 million barrels per daily (bpd) when oil prices crashed and several facilities that were not profitable were shut down. The refining capacity had reached 17.9million barrels per day (bpd) as of March. There have been some other closings.
The U.S. refiners operate at close to peak levels in order to produce fuel, currently operating at 94% capacity. According to them, there’s little that they can do in order to meet Biden’s needs quickly.
Bruce Niemeyer (corporate vice president for strategy and sustainability, Chevron) stated that “our refineries are running out” on Tuesday at a Reuters Energy Transition Conference. This was before the public release of the letter.
Shell “produces at capacity”, a spokesperson stated. Shell will also be looking into ways to expand oil and gasoline production.
Exxon is the subject of president Trump’s fury against oil companies. Exxon invested 250,000 bpd to grow its refining capability, equivalent to a medium-sized refinery.
Spitler stated that the Obama administration could in the near term lift Jones Act provisions which force domestic shippers into using U.S. flagged ships that use union labor or waive fuel regulations.
U.S. Government has lifted summertime bans that prohibited the use of cheaper fuels, which can cause smog-related problems in emergencies. Recent emergency powers were used by the Administration to lift the ban for gasoline that contains higher amounts of ethanol.
Phillips 66 Valero, Marathon Petroleum and Marathon Petroleum all said that they would cooperate with the administration. BP and Chevron did not respond immediately.
As oil prices rise to new highs, Biden is stepping up his attacks on the companies that produce them.
According to two people familiar with the conversations, White House officials privately have asked refiners questions about their idle plants and excess capacity, and whether they know of any other options to boost gasoline supplies.
Unexpectedly high gas prices contributed to persistent consumer price inflation. This anger led to voter anger just before the Nov. 8 midterm election, where Biden’s Democratic Party defends its control over Congress.
Biden believes that rising oil prices are due to U.S.-led US sanctions which removed Russian energy supply from the international market.
He blames major oil companies, which he says are responsible for record earnings and rising prices. They give profits to investors and not spend on refining and drilling.
Biden stated last week that Exxon had made more money this year than God after its first quarter profit doubled to $5.48billion.
Exxon’s Spitler claimed that over 50 billion dollars has been invested by the United States top oil producers in five years. This investment resulted a near 50% increase in U.S.-oil output.
Jennifer Granholm (U.S. Energy Secretary) plans to convene an emergency meeting about how refiners can deal with higher prices. Biden requested that oil companies provide concrete ideas to help increase oil refining capacity and to explain why this has happened in the past.