President Biden is demanding top oil executives boost the supply of gasoline, diesel and other refined products on the market to combat rising prices.
Biden told the executives in a letter this week that historically high profit margins for refining oil into gasoline and diesel were “not acceptable” during a time of war and called on the companies to work with his administration to address price increases caused by Russia’s invasion of Ukraine, according to copies of the letter shared with The Hill.
Biden also said he was directing Energy Secretary Jennifer Granholm to convene an emergency meeting on gas prices with industry leaders in the coming days. And he warned that he is prepared to use his emergency powers to increase refinery output and capacity.
“There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing. But amid a war that has railed the gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening the pain,” Biden wrote in the letter, copies of which were sent to executives at Exxon Mobil, Shell, Valero, Marathon, Phillips 66, BP and Chevron.
“Your companies and others have an opportunity to take immediate actions to increase the supply of gasoline, diesel, and other refined product you are producing and supplying to the United States market,” the president wrote.
Biden also asked the companies to submit “an explanation of any reduction of your refining capacity since 2020” to Granholm as well as any proposals to address current challenges with supply, price and refining capacity.
The letter represents the latest effort by Biden to address record-high gasoline prices, which topped $5 per gallon on average nationally over the weekend.
Biden has limited options to address high gas prices unilaterally and has taken a handful of actions, including ordering an unprecedented release from the Strategic Petroleum Reserve earlier this year.
Gas prices were already elevated earlier this year but have been severely exacerbated by Russia’s war in Ukraine, which began at the end of February and disrupted the global energy supply.
Meanwhile, some of the leading oil companies like Exxon and Chevron reported massive jumps in profits in the first few months of this year amid the war.
“The crunch that families are facing deserves immediate action,” Biden wrote in the letter, which was dated June 14. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis and respect the critical equities of energy workers and fence-line communities.”
The letter triggered some criticism from the industry. At a roundtable hosted by the Problem Solvers Caucus — a group of centrist lawmakers in Congress from both sides of the aisle — a representative of a major oil lobbying group implied the president could have used more tact in his messaging
“The president sent a letter to a number of our members this morning criticizing some of the switching that we’ve seen. …This is where tone matters,” said Amanda Eversole, executive vice president and chief advocacy officer for the American Petroleum Institute.
Chevron spokesperson Bill Turenne said the company understands concerns about elevated fuel prices and is working to expand production by 15 percent this year, while criticizing the Biden administration’s energy policies.
“We share these concerns, and expect the Administration’s approach to energy policy will start to better reflect the importance of addressing them,” Turenne said. “Unfortunately, what we have seen since January 2021 are policies that send a message that the Administration aims to impose obstacles to our industry delivering energy resources the world needs.”
A representative for BP declined to comment on the White House letter, but pointed to the company’s earnings report from the first quarter of 2022 that said BP refineries operated at 95 percent capacity during that time.
“Though our refinery footprint in the U.S. is relatively small today, we are producing at capacity and continue to explore options that would have the result of delivering additional energy products to customers in the U.S. and abroad,” a Shell spokesman said in an email.
Shell is working to accelerate production of crude oil in the Gulf of Mexico and repurposing a Louisiana refinery to produce lower-carbon fuels, the spokesman said.
In a statement responding to Biden’s letter, Exxon Mobil suggested the federal government waive the Jones Act and certain fuel requirements in order to boost supplies over the short term, and to streamline approval for pipelines and support domestic investment in the long term.
“We have been in regular contact with the administration to update the President and his staff on how ExxonMobil has been investing more than any other company to develop U.S. oil and gas supplies,” Exxon said.
— Rachel Frazin contributed.
Updated: 8:24 p.m.