Oil companies have hit back against Joe Biden after the president accused them of intentionally exacerbating the strain on Americans’ pocketbooks after the average price of gas per gallon surpassed $5.00.
Exxon and Chevron said the Biden administration could be doing more to address the surging oil prices, accusing the president of ‘imposing obstacles to our industry to deliver energy resources’.
The president sent letters on Wednesday to Marathon Petroleum Corp, Valero Energy Corp., ExxonMobil, Phillips 66, Chevron, BP, and Shell to demand action on lowering gas prices at the corporate level and account for the surge.
He demanded the oil refining companies to explain why they are not putting more fuel on the market as they reap windfall profits.
In a letter to Exxon obtained by Axios, Biden wrote that the difference ‘of more than 15% at the pump is the result of the historically high profit margins for refining oil into gasoline, diesel and other refined products.’
Biden also said last week Exxon made ‘more money than God last year’ as he attacked oil companies for not paying taxes and making large profits while gas prices spike.
Oil companies have hit back against Joe Biden after the president accused them of intentionally exacerbating the strain on Americans’ pocketbooks after the average price of gas per gallon surpassed $5.00
But Exxon and Chevron have hit back and said the Biden administration could be doing more to address the oil prices.
‘We understand the significant concerns around higher fuel prices currently faced by consumers around the country, and the world,’ Chevron said in a statement.
‘We share these concerns, and expect the Administration’s approach to energy policy will start to better reflect the importance of addressing them.’
Chevron claimed that since Biden came to office, the administration has communicated that it will ‘impose obstacles to our industry delivering energy resources the world needs’.
Exxon offered short and long term solutions for high oil prices, saying that emergency measures ‘such as waivers of Jones Act provisions and some fuel specifications to increase supplies’ could be used in the short term.
It added that long term solutions could include ‘streamlined regulatory approval and support for infrastructure such as pipelines’.
The president sent letters on Wednesday to Marathon Petroleum Corp, Valero Energy Corp., ExxonMobil, Phillips 66, Chevron, BP, and Shell to demand action on lowering gas prices at the corporate level and account for the surge. Pictured: Gas prices at a Chevron station in LA
Both companies said they have been responding to the high oil prices, with Chevron saying it will increase its Permian Basin production by 15 percent this year, while Exxon said it had increased refining capacity to process US light crude by 250,000 barrels a day.
But in his letter sent to the top oil companies, Biden said the industry’s lack of action is blunting the administration’s attempts to offset the impact of oil-rich Russia’s invasion of Ukraine, such as releases from the U.S. oil reserves and adding more ethanol to gasoline.
‘At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,’ Biden wrote, adding the lack of refining was driving up gas prices faster than oil prices.
Energy companies are enjoying bumper profits since the invasion, which added to a supply squeeze driving crude prices above $100 a barrel. Fuel demand has remained robust despite record-high gasoline prices.
White House spokesperson Karine Jean-Pierre said refiners have a ‘patriotic duty’ to increase supplies and cut consumer costs.
‘We are calling on them to do the right thing, to be patriots here,’ she told reporters.
U.S. refining capacity peaked in April 2020 at just under 19 million barrels per day (bpd), when prices tanked during the pandemic and refiners shut several unprofitable facilities. As of March, refining capacity was 17.9 million bpd, but there have been other closures announced since then.
U.S. refiners are running at near-peak levels to process fuel – currently at 94% of capacity. They say there is little they can do to quickly satisfy Biden’s demands.
‘Our refineries are running full out,’ Bruce Niemeyer, corporate vice president of strategy and sustainability at Chevron, said on the sidelines of a Reuters energy transition conference on Tuesday, before the letter was made public.
The administration continues to blame rising gas costs on the ‘Putin price hike’ resulting from Russia’s invasion of Ukraine and on greedy oil companies purposefully not increasing production to meet the demand so they can charge more per gallon
Shell is ‘producing at capacity’ and looking at options to increase oil and gasoline production, a spokesperson said.
Exxon, the focus of the president’s ire against oil companies last week, has invested to expand its refining capacity by 250,000 bpd, the equivalent of a medium-sized refinery, said spokesman Todd Spitler.
Spitler said the administration in the short term could lift the Jones Act provisions that force domestic shippers to use U.S. flagged vessels that employ union labor, or waive fuel regulations.
The U.S. government has waived summertime bans on the use of cheaper, smog causing fuel components in emergency cases. The administration recently used emergency powers to lift the ban on gasoline with higher blends of ethanol.
Phillips 66, Valero and Marathon Petroleum said they would work with the administration. BP did not immediately comment.
Biden has escalated his rhetoric against oil companies as pump prices have raced to record highs above $5 per gallon.
Privately, White House officials have been asking refiners about idled plants and spare capacity and whether there are other ways to increase gasoline supply, according to two sources familiar with the discussions.
Rising gas prices have helped drive unexpectedly persistent consumer price inflation and voter anger before November 8 midterm elections where Biden’s Democratic Party is defending its control of Congress.
Biden has attributed rising oil prices primarily to U.S.-led sanctions that took Russian energy supplies off the global market.
He has also blamed major oil companies riding rising energy prices to record earnings, and giving profits to investors rather than spending on new drilling and refining capacity.
‘Exxon made more money than God this year,’ Biden said last week, after the major’s first quarter profit doubled from the previous year to $5.48 billion.
Exxon’s Spitler said the top U.S. producer has invested more than $50 billion over the past five years that resulted in a nearly 50% increase in U.S. oil output.
U.S. Energy Secretary Jennifer Granholm plans to host an emergency meeting on how refiners can respond to higher prices, Biden said, asking oil companies to provide ‘concrete ideas’ to increase oil refining and explain why they may have cut such capacity in the last two years.
Granholm has requested a meeting with refinery executives no later than June 21, two sources familiar with the request said.