Page 4 - NorthAmOil Week 24 2022

NorthAmOil COMMENTARY NorthAmOil

Biden clashes with refiners

amid high prices

US President Joe Biden has criticised the energy industry for

historically high refining margins, and continues to push refiners

to ramp up output

US US President Joe Biden has clashed with the
country’s energy industry amid oil and gasoline Profit concerns
WHAT: prices that remain high. This week, Biden sent a Biden’s focus on the profits being made by refin-
US President Joe letter to executives at ExxonMobil, Shell, Valero, ers comes as US crude prices remain at around
Biden has said the Marathon Petroleum, Phillips 66, BP and Chev- $110 per barrel while average nationwide gaso-
refining industry has ron, calling on them to ramp up output in a bid line prices have recently hit $5 per gallon ($1.32
unacceptably high profit to lower gasoline prices. The letter claimed that per litre) for the first time.
margins under current high refining margins under current circum- Such high prices are being seen despite the
circumstances. stances were worsening the pain for the public, Biden administration’s efforts to bolster crude
and went as far as to say they were unacceptable. supplies via the largest ever release from the
WHY: Biden also warned that he was prepared to use US Strategic Petroleum Reserve (SPR). In total,
The US, much like the his emergency powers to increase refinery out- the US is releasing 180mn barrels of SPR crude,
rest of the world, is put and capacity. with roughly 1mn barrels per day (bpd) being
struggling with high fuel The letter comes as Biden tries to bring released between May and July, and a further
prices, which have been prices down ahead of US midterm elections in release scheduled between August and October.
exacerbated by the war in November that are not looking promising for Market conditions have been exacerbated
Ukraine. his Democrat Party. Further steps are also being by the war in Ukraine, which has led to many –
taken. Biden said he would order US Secretary particularly Western – countries declaring that
WHAT NEXT: of Energy Jennifer Granholm to convene an they would phase out imports of Russian crude.
Biden has threatened to emergency meeting with industry leaders on Biden acknowledged this in his letter.
use emergency powers gasoline prices. Indeed, a day after Biden sent “There is no question that Vladimir Putin is
to increase refinery his letter, media reported that the US Depart- principally responsible for the intense financial
output but has received ment of Energy (DoE) had sent an invitation to pain the American people and their families
some pushback from the meet next week to the same seven companies are bearing,” he wrote. “But amid a war that has
industry. that had received the letter. railed the gasoline prices more than $1.70 per Pull quote to go
Further details had not emerged as of press gallon [$0.45 per litre], historically high refin-
time but Biden has started receiving some ery profit margins are worsening the pain,” he in here Pull quote
pushback from the companies he had written added. to go in here Pull
to. Both ExxonMobil and Chevron have said the “Your companies and others have an oppor-
Biden administration could be doing more to tunity to take immediate actions to increase quote to go in
address oil and gasoline prices while highlight- the supply of gasoline, diesel, and other refined
ing steps they were taking to help meet higher product you are producing and supplying to the here Pull quote
demand. United States market,” Biden continued.
These developments set the stage for potential In addition, he asked the companies he was to go in here Pull
standoff between the US government and the addressing to explain any reduction in their quote to go in
industry. If Biden tries to use emergency pow- refining capacity to Granholm and also to sub-
ers, further pushback can be expected. At the mit any proposals to her for resolving the cur- here.
same time, the companies involved are likely to rent challenges around supply, refining capacity
call for more favourable energy policy following and prices.
Biden’s initial efforts to prioritise environmen-
tal protection and push for a longer-term shift Pushback
away from fossil fuels. The overall direction of If ExxonMobil and Chevron’s responses are
his energy policy has continued to point to an representative of the entire group of compa-
eventual end to fossil fuel development even as nies, though, Biden’s approach will run into at
he calls for more immediate-term oil produc- least some resistance. This is in part because he
tion to help reduce prices. is seen as being comparatively unfriendly to oil

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