WASHINGTON – President Biden sanctions some of the biggest oil companies for profiting from rising energy prices and “aggravating pain” for consumers, as he ramps up pressure on them to increase refining capacity and lower prices pump.
With average gas prices in the United States at the top $5 a gallon Mr. Biden pointed to energy companies for the first time in a letter to seven top executives on Tuesday. He asked them to explain the decision to limit refining capacity and announced that his administration would hold an “emergency meeting” to discuss ways to resolve the crisis.
“At a time of war, it is unacceptable for higher-than-normal refinery margins to be channeled directly into American homes,” Biden said in the letter. “There is no doubt that Vladimir Putin is primarily responsible for the intense financial pain that the American people and their families are suffering. But in the wake of the war sending gasoline prices up more than $1.70 a gallon, historically high refinery margins are exacerbating that pain.”
The letter, addressed to executives at BP, Chevron, Exxon Mobil, Marathon Petroleum, Phillips 66, Shell and Valero Energy, illustrates the president’s attempt in recent weeks to address at least some of the reasons why companies make billions of dollars in profits. while deflecting any responsibility from his administration. Rising gas prices have contributed to a drop in Mr Biden’s approval rating ahead of the fall midterm elections.
The president argued in the letter that the companies had failed to restore the refining capacity they had reduced in the previous days of the pandemic, leaving it at its lowest level in more than half a decade. At the same time, it is said that there is an “unprecedented disparity between oil prices and gas prices”, noting that the last time crude oil prices touched $120 a barrel was in March, gas prices. is $4.25. But today, gas prices are 75 cents higher.
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“That difference – more than 15% at the pump – is the result of historically high margins for refining oil into gasoline, diesel and other refined products,” Biden said. “Since the start of the year, refineries margins for refining gasoline and diesel have tripled and are now at their highest levels ever.”
House Democrats passed a bill last month that would have allowed Mr. Biden to declare an energy emergency and crack down on companies believed to be overpriced, but it doesn’t appear to be. likely to be approved by the Senate. Republicans still blame Mr Biden’s energy and climate policies at least in part for soaring gas prices, accusing the president of undermining the US energy industry.
Mike Sommers, president of the American Petroleum Institute, countered that the administration shares responsibility for higher energy prices and called for approval of new drilling leases and approval of “critical energy infrastructure”. ” like pipes.
“Ahead of his trip to the Middle East next month,” Mr. Sommers said in a statement, “we urge the president to prioritize unearthing U.S. energy sources that make the world jealous rather than increasingly dependent on them.” to foreign sources”.
Energy experts say Mr Biden’s letter is another example of how Democrats and Republicans are trying to pin the blame on rising gasoline prices.
“It’s part of the mixed story that it’s the refiner’s fault, the oil companies’ fault,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “The narrative from the Republicans is Biden’s fault, and that’s not true. But it’s also not true that refiners have conspired ‘to raise prices,’ he said.
The United States has lost 5.9% of refining capacity since 2019, as refineries reconfigure to produce new products or close because their costs exceed revenues.
By the end of next year, operators plan to close the LyondellBasell refinery in Houston, as they are facing $1.5 billion in costs to meet Clean Air standards. The company tried to sell the factory, but no one was interested in buying.
According to Turner, Mason & Company, a consulting firm in Texas, the trend is part of a global shift in the oil processing sector, which is moving away from North America and Europe, into Asia and China. Winter. Refineries have shut down at least nine plants in the past three years in the United States. Many facilities can no longer operate for profit and have been refitted to process biofuels.
The Covid pandemic, which has dampened demand for fuel as the economy shrinks, has prompted hasty decision-making among executives, who say a future sales rebound is a matter of concern. government policies favor more efficient and electric vehicles.
No new US refineries have been built in decades.
Holly Frontier, Marathon, PBF, Phillips 66 and Shell are among refiners that have closed plants in Wyoming, New Mexico, North Dakota, New Jersey, Pennsylvania and Louisiana. Some refineries, like Shell, say they are trying to reduce greenhouse gas emissions that cause climate change. Others, like PBF, say the operations they shut down are no longer profitable.
At least four other refineries, in Montana, Oklahoma, Alabama and California, are set to downsize and convert from conventional fuels to renewable diesel.
In trying to bring down oil prices, the Biden administration could relax regulations that would allow the reopening of an accident-prone refinery in St. Croix has a dubious environmental profile. Such an action would likely prompt strong opposition from environmentalists, as the refinery continuously releases sulfurous gas into the air and creates a fine oil mist that blankets the houses. surrounding houses.
Global fuel markets have tightened since Russia invaded Ukraine in February, and refineries are struggling to keep up with growing demand as much of the world recovers from bad times. of the pandemic.
Overall, worldwide refinery capacity has grown by less than one percent over the past three years. Refinery capacity in Europe has fallen by 5.7%, adding to the continent’s problems as European countries try to cut Russian energy.
That has opened up new opportunities for Middle Eastern oil companies, which have increased refinery capacity by nearly 13% in the past three years.
