Biden criticizes oil refineries for recording a record rise in gasoline prices and profits

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Gas prices over $6.00 are announced at Station 76 in Santa Monica, California, United States, on May 26, 2022. REUTERS/Lucy Nicholson

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WASHINGTON (Reuters) – U.S. President Joe Biden on Wednesday demanded oil refiners explain why they were not putting more gasoline on the market, sharply escalating his rhetoric against the industry as he faces pressure over rising prices.

Biden wrote to executives from Marathon Petroleum (MPC.N)Valero Energy Corporation (VLO.N) And Exxon Mobil Corporation (XOM.N) They complained that they cut down on oil refining to collect their profits, according to a transcript of message Viewed by Reuters.

The letter was also sent to Philips 66 (PSX.N)Chevron Corporation (CVX.N)BP (BP.L) paralyze (coincidence)A White House official, speaking on condition of anonymity, told Reuters.

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“In wartime, refinery profit margins far above the norm are being passed directly to American families,” Biden wrote, adding that a lack of refining was driving gas prices higher than oil prices.

US energy companies are enjoying bumper profits as Russia’s invasion of Ukraine increases supply pressure that has pushed crude oil prices above $100 a barrel, and as demand for fuel remains strong, despite record gasoline prices.

US refining capacity peaked in April 2020 at just under 19 million barrels per day, as refineries closed several unprofitable facilities during the coronavirus pandemic. As of March, refining capacity was 17.9 million barrels per day, but other shutdowns have since been announced.

US refineries are operating at near-peak levels to process the fuel – currently at 94% of capacity – and say there is little they can do to meet Biden’s demands.

“Our refineries are completely running out,” Bruce Niemeyer, Chevron’s vice president of strategy and sustainability, told Reuters on the sidelines of the Energy Transmission Conference in New York on Tuesday, before the release of Biden’s message.

Biden said industry inaction is discouraging the administration’s attempts to offset the impact of oil-rich Russia’s invasion of Ukraine, such as emissions from the country’s oil reserves and adding more cheaper ethanol to gasoline.

On Friday, the president accused the US oil industry, and ExxonMobil in particular, of taking advantage of supply shortages to fatten profits after a report showed. nL1N2XY03V

blowing threads

Biden is ramping up his attacks against oil companies as gas pump prices race to record levels above $5 per gallon as inflation hits a 40-year high. [nL1N2XX1VP] Read more

In private, White House officials have been reaching out to refineries to inquire about idle plants, excess capacity and whether there are other ways to increase gasoline supplies, according to two sources familiar with the discussions.

Rising gas prices helped drive unexpectedly persistent consumer price inflation and voter anger ahead of the November 8 midterm elections as Biden’s Democratic Party defends control of Congress.

US consumer price inflation unexpectedly accelerated in May, resulting in the largest annual increase in four decades. White House officials have hotly debated how to respond to a problem they once thought would fade and now see as largely outside their control. Read more

Biden attributed the rise in oil prices primarily to US-led sanctions that stripped Russian energy supplies from the global market after the invasion of Ukraine.

But he has also taken the fight to the oil majors, who are riding high energy prices to make record profits, handing those profits to investors rather than spending on new exploration and refining capacity.

“Exxon has made more money than God this year,” Biden said last week.

Exxon’s profit doubled in the previous year’s first quarter to $5.48 billion, and the president told investors it would increase share buybacks. Read more

Biden said U.S. Energy Secretary Jennifer Granholm plans to host an emergency meeting on how refiners will respond to rising prices, asking oil companies to respond in advance.

She said they should provide “concrete ideas” to increase oil refining with an explanation of why they might have cut off such capacity in the past two years.

“We’re in full swing,” Granholm said in an MSNBC interview. “The price of oil and gas is accelerating the high cost and the high rate of inflation around the world,” he added.

“We’re not against profit,” Granholm said, but added that when there’s a 225% increase in profit year on year, it means something else is going on.

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Additional reporting by Trevor Honeycutt, Garrett Renshaw and David Gavin; Editing by Chizu Nomiyama, Heather Timmons and Margarita Choi

Our criteria: Thomson Reuters Trust Principles.

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