President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits had tripled in a time of war between Russia and Ukraine as Americans struggled with record oil prices. pump.
“The crisis facing families deserves immediate action,” Biden wrote in the draft of a letter to oil refiners obtained by The Associated Press. “Your companies must work with my administration to come up with concrete short-term solutions that respond to the crisis.”
Nationwide gas prices are averaging around $5 a gallon, an economic burden for many Americans and a political threat to the president’s Democratic colleagues as they prepare for the midterm elections. Broader inflation began to rise last year as the US economy recovered from the coronavirus pandemic, but has accelerated in recent months as energy and food prices have climbed after Russia invaded Ukraine in February and disrupted global commodity markets.
The government announced on Friday that consumer prices jumped 8.6% from a year ago, the worst increase in more than 40 years.
The draft letter notes that gas prices averaged $4.25 a gallon when oil was last near the current price of $120 a barrel in March. This 75-cent difference in average gas prices in just a few months reflects both a shortage of refining capacity and profits that “are currently at their highest levels on record,” the letter said.
According to Biden, 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, but the claim may have some resonance with voters.
Some Liberal lawmakers have proposed cracking down on corporate profits amid rising inflation. Senator Bernie Sanders, an independent from Vermont, in March proposed a 95% tax on profits exceeding pre-pandemic corporate averages.
The president has harshly criticized what he sees as profiteering amid a global crisis that could potentially push Europe and other parts of the world into recession, saying after a speech on Friday that ExxonMobil “has earned more more money than God this year”. ExxonMobil responded by saying it had already informed the administration of its planned investments to increase oil production and refining capacity.
“There is no doubt that (Russian President) Vladimir Putin is primarily responsible for the intense financial pain that the American people and their families are experiencing,” Biden’s draft letter reads. “But amid a war that has driven gasoline prices more than $1.70 a gallon, historically high refinery profit margins are compounding that pain.”
The letter states that the administration is prepared to “use all reasonable and appropriate tools of the federal government and emergency authorities to increase refinery capacity and production in the near term, and to ensure that every region of this country is adequately supplied”. He notes that Biden has already released oil from the U.S. Strategic Reserve and increased ethanol blending standards, though neither of those actions have put lasting downward pressure on prices.
The president sends the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell.
He also asked Energy Secretary Jennifer Granholm to call an emergency meeting and consult with the National Petroleum Council, a federal advisory group from the energy industry.
Biden is asking each company to explain to Granholm any drop in refining capacity since 2020, when the pandemic began. He also wants companies to provide “any concrete ideas that would address immediate inventory, price and refining capacity issues in the coming months, including transportation measures to get the refined product to market.” “.
There may be limits to the additional capacity that can be added. The U.S. Energy Information Administration released estimates on Friday that “refinery utilization will hit a monthly average of 96% twice this summer, near the upper limits of what refiners can sustain consistently.”
The draft letter notes that around 3 million barrels per day of refining capacity worldwide has been taken offline since the start of the pandemic. In the United States, refining capacity fell by more than 800,000 barrels per day in 2020.