President Joe Biden on Wednesday called on US oil refineries to produce more gasoline and diesel, saying their profits had tripled during the war between Russia and Ukraine as Americans struggled with record high pump prices.
“The collapse that families are facing deserves immediate action,” Biden wrote in a draft letter to the oil refineries from the Associated Press. “Your companies need to work with my administration to come up with concrete, short-term solutions to the crisis.”
Gas prices across the country average about $ 5 a gallon, an economic burden for many Americans and a political threat to the president’s fellow Democrats, who will run in the by-elections. Wider 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 soared after Russia invaded Ukraine in February and disrupted global markets. raw materials.
The government said on Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years.
The draft notes note that gas prices averaged $ 4.25 a gallon, when oil was last close to the current price of $ 120 a barrel in March. The difference of 75 cents in average gas prices in just a few months reflects both a shortage of refinery capacity and profits that are “currently at their highest levels ever recorded,” the letter said.
As Biden sees it, refineries are taking advantage of the uncertainty caused by wartime. His message that corporate greed contributes to higher prices is controversial among many economists, but the claim may have some resonance among voters.
Some liberal lawmakers have proposed repressing corporate profits amid higher inflation. Senator Bernie Sanders, independent of Vermont, proposed a 95 percent profit tax in March that exceeded the average of companies before the pandemic.
The president has sharply criticized what he sees as profiteering amid a global crisis that could potentially push Europe and other parts of the world into recession, saying in a speech Friday that ExxonMobil “made 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 severe financial pain that the American people and their families are suffering,” Biden’s draft letter said. “But amid a war that has raised gasoline prices by more than $ 1.70 a gallon, historically high refinery profit margins are exacerbating that pain.”
The letter said the administration was ready to “use all reasonable and appropriate instruments of the federal government and emergency authorities to increase the refinery’s capacity and output in the short term and ensure that each region of the country is adequately supplied”. It notes that Biden has already released oil from the US Strategic Reserve and raised ethanol blending standards, although none of the action has put lasting pressure on lower prices.
The president sent the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell.
He also ordered Energy Minister Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group made up of the energy sector.
Biden asks each company to explain to Granholm any decline in refining capacity after 2020, when the pandemic began. He also wants companies to provide “any concrete ideas that would address the immediate problems with inventory, cost and refining capacity in the coming months – including transport measures to bring the refined product to market.”
There may be limits to how much more capacity can be added. The US Energy Information Administration on Friday released estimates that “refinery use will reach an average monthly level of 96% twice this summer, close to the upper limits of what refiners can maintain at all times.”
The draft notes note that approximately 3 million barrels per day of refining capacity worldwide have been excluded since the beginning of the pandemic. In the United States, refining capacity fell by more than 800,000 barrels per day in 2020.
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