Joe Biden tells US oil refiners rising profits ‘not acceptable’ as war rages
US President Joe Biden targeted refineries on Wednesday for failing to produce gasoline, saying their soaring profit margins were “unacceptable” in a time of war.
In letters to seven oil companies, including ExxonMobil, BP, Shell and Valero, Biden called for “immediate action” to provide more fuel, saying the government was willing to use “all reasonable and appropriate” tools to make the supply available. increase in the near future. term.
Biden called on the refineries to explain why they had shut down some factories that make fuel, contributing to “an unprecedented discrepancy between the price of oil and the price of gas.”
“There is no doubt that Vladimir Putin is primarily responsible for the intense financial pain that the American people and their refineries are carrying,” the president wrote. “But in the midst of a war that has sent gasoline prices soaring by more than $1.70 a gallon, the historically high refinery profit margins are exacerbating that pain.”
Neither the companies nor their trading groups immediately responded to requests for comment.
Analysts said the letters were another attempt to shift blame for an oil market rally that has sent US gasoline prices soaring more than double since Biden took office last year, hitting a record high of more than $5 a gallon last week.
US gasoline prices, equivalent to around £1.07 a litre, remain well below levels in Europe, but have fueled decades-long inflation across the US economy, undermining Biden’s approval ratings for crucial midterm elections this year.
Some US oil companies and refiners report record cash flows as rising global demand for their products, coupled with moderate supply growth, pushes crude oil and gasoline prices to multi-year highs.
In an effort to drive down crude oil prices, the White House has repeatedly called on OPEC+ producers since August to increase supply, release record amounts of oil from a federal strategic petroleum stockpile, and recently took control of the oil supply. pollution of gasoline mixtures.
Biden will also travel to Saudi Arabia, the world’s largest oil exporter, next month on a trip to the Middle East — part of a thawing of relations between the White House and the Saudi court.
Oil prices have doubled since early 2021, including the surge this year following Moscow’s invasion of Moscow and a broader embargo on Russian crude.
The Biden administration has also called on US shale producers to increase production and reverse previous efforts to restrict drilling. US oil production remains well below pre-pandemic peaks.
U.S. refining capacity averaged 18.8 million barrels per day in 2019, but has fallen below 18 million barrels per day this year — in part due to the collapse of refining margins during the pandemic and the high cost of maintaining operations. , say analysts.
Global refinery output has also fallen due to a decline in refined products from China. Sanctions against Russia threaten to tighten supplies further.
Analysts said there were few US refineries that could do in the short term to fix the shortages — and that adding new capacity could jeopardize their climate promises.
“There is no refining capacity that is idle on the sidelines that wouldn’t take a lot of time and money to restart, meaning it can’t help at least in the summer,” said Robert Campbell, head of energy transition research at Energy. aspect .
For some who have recently closed refineries, such as Shell, resuming operations would significantly increase their greenhouse gas emissions, Campbell said, adding that doubts about oil demand make expensive investments more difficult in the long run.
“I understand that many factors contributed to the business decisions to reduce refinery capacity that took place before I took office,” Biden wrote in his letters, which were also sent to Marathon Petroleum, Phillips 66 and Chevron. “But in times of war, refinery profit margins that are way above normal and passed directly to American families are not acceptable.”