Biden asks US oil refiners to boost their production
President’s letter to 7 firms says profits ‘at their highest levels ever recorded’
President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record high prices at the pump.
“The crunch that families are facing deserves immediate action,” Biden wrote in a letter to seven oil refiners. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”
Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, and accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets.
The government reported Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years.
The letter, sent to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell, notes that gas prices were averaging $4.25 a gallon when oil was last near the current price of $120 a barrel in March. That 75-cent difference in average gas prices in a matter of just a few months reflects both a shortage of refinery capacity and profits that “are currently at their highest levels ever recorded,” the letter states.
The American Petroleum Institute, which represents the industry, said in a statement that capacity has been diminished as the Biden administration has sought to move away from fossil fuels as part of its climate change agenda.
“The administration’s misguided policy agenda shifting away from domestic oil and natural gas has compounded inflationary pressures and added headwinds to companies’ daily efforts to meet growing energy needs while reducing emissions,” API CEO
Mike Sommers said in a statement.
The letter is unlikely to start a chain of events that would boost supplies. Refineries have gone through unprecedented, unplanned maintenance globally in the last three months and there is an extreme shortage being felt across the globe, said Claudio Galimberti, senior vice president at Rystad Energy. China’s decision to limit its exports of oil products also contributed to the problem, he said.
“U.S. refiners cannot increase capacity beyond current levels,” Galimberti said. “If they could, they would have done it already.”
As Biden sees it, refineries are capitalizing on the uncertainties caused by “a time of war.” His message that corporate greed is contributing to higher prices has been controversial among many economists, yet may have some resonance with voters.
Some liberal lawmakers have proposed cracking down on corporate profits amid soaring inflation. Sen. Bernie Sanders, I-Vt., in March proposed a 95% tax on profits beyond companies’ pre-pandemic averages.