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Sunday, June 26, 2022

Biden calls for more production and lower profits in letter to US oil refiners

President Joe Biden on Wednesday called on US oil refiners to produce more gasoline and diesel, saying their profits have tripled during the war between Russia and Ukraine as Americans struggle with record high prices at the pump. .

“The crisis the 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 you concrete, near-term solutions that address the crisis.”

Read more: Nationwide average for gasoline tops $5 per gallon, AAA says

Gas prices around the country average $5 a gallon, an economic burden for many Americans and a political threat to the president’s fellow Democrats heading into the midterm elections.

Broader inflation began to rise last year as the US economy recovered from the coronavirus pandemic, but accelerated in recent months as energy and food prices rose after Russia invaded Ukraine in February and disrupted global commodity markets .

Consumer prices have risen 8.6 per cent from a year ago, the government reported on Friday, the worst increase in more than 40 years.

In March, when oil was close to its current price of $120 a barrel, gas prices averaged $4.25 a gallon, the letter said. The letter said a 75 per cent difference in average gas prices in just a few months reflects a reduction in refinery capacity and profits that “are currently at their highest ever recorded.”

The American Petroleum Institute, which represents the industry, said in a statement that capacity has waned as the Biden administration sought to move away from fossil fuels as part of its climate change agenda.

“While we appreciate the opportunity to open increased dialogue with the White House, the administration’s misguided policy agenda moving away from domestic oil and natural gas has exacerbated inflationary pressures and increased energy needs while reducing emissions.” The daily efforts of the companies to accomplish this have added up.” API CEO Mike Somers said in a statement.

Somers said in a letter to President Biden and his cabinet yesterday, ten meaningful policy actions that will ultimately ease the pain at the pump and bolster national security by approving critical energy infrastructure, capital Other urgent priorities, including increasing access to electricity, stopping the sale of energy leasing.

As Biden sees it, refineries are taking advantage of the uncertainties caused by “times of war.” His message that corporate greed is contributing to higher prices has been controversial among many economists, yet the claim may have some resonating with voters.

Some liberal lawmakers have proposed a crackdown on corporate profits amid high inflation. Bernie Sanders, a Vermont independent, in March proposed a 95 percent tax on companies’ profits above the pre-pandemic average.

The president has strongly criticized what he views as profiteering in the midst of a global crisis that could potentially push Europe and other parts of the world into recession, after a speech Friday said ExxonMobil ” Earned more money this year than God.” ExxonMobil responded by saying that it has already informed the administration about its planned investment to increase oil production and refining capacity.

“There is no doubt that (Russian President) Vladimir Putin is primarily responsible for the acute financial suffering caused to the American people and their families,” Biden’s letter said. “But in the midst of a war that has raised gasoline prices by more than $1.70 a gallon, historically high refinery profit margins are adding to that pain.”

Read more: Russia halts natural gas exports to Finland after NATO bid

The letter states that the administration “stands ready to use all reasonable and appropriate federal government equipment and emergency officials to increase refinery capacity and production in the near term, and to ensure that every area of ​​this country is properly protected.” is duly supplied.” It notes that Biden has already released oil from the U.S. Strategic Reserve and increased ethanol blending standards, although neither action put pressure on prices for a lasting decline.

The president is sending letters to Marathon Petroleum, Valero Energy, ExxonMobil, Philips 66, Chevron, BP and Shell.

He has also directed Energy Secretary Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group drawn from the energy sector.

Biden is asking each company to inform Granholm of any decline in solvency since 2020, when the pandemic began. He also wants companies to “provide any concrete ideas that will urgently address inventory, price and solvency issues in the coming months — including transportation measures to bring the refined product to market.”

There may be limits to how much capacity can be added. The U.S. Energy Information Administration released estimates on Friday that “refinery use will reach twice-monthly average levels this summer of 96 percent, which refiners can sustain consistently.”

Around 3 million barrels of refining capacity around the world has gone offline since the pandemic began, the letter said. In the US, refining capacity fell by more than 800,000 barrels a day in 2020.

World Nation News Desk
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