Biden tells oil refiners to produce more gas, take fewer profits

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President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record high prices at the pump.

“The crunch that families are facing deserves immediate action,” Biden wrote in a letter to seven oil refiners. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”

Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for the president’s fellow Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, but it accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets.

The government reported on Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years.

The letter notes that gas prices were averaging $4.25 a gallon when oil was last near the current price of $120 a barrel in March. That 75-cent difference in average gas prices in a matter of just a few months reflects both a shortage of refinery capacity and profits that “are currently at their highest levels ever recorded,” the letter states.

The American Petroleum Institute, which represents the industry, said in a statement that capacity has been diminished as the Biden administration has sought to move away from fossil fuels as part of its climate change agenda.

“While we appreciate the opportunity to open increased dialogue with the White House, the administration’s misguided policy agenda shifting away from domestic oil and natural gas has compounded inflationary pressures and added headwinds to companies’ daily efforts to meet growing energy needs while reducing emissions,” API CEO Mike Sommers said in a statement.

Sommers added, “I reinforced in a letter to President Biden and his Cabinet yesterday ten meaningful policy actions to ultimately alleviate pain at the pump and strengthen national security, including approving critical energy infrastructure, increasing access to capital, holding energy lease sales, among other urgent priorities.”

As Biden sees it, 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, yet the claim may have some resonance with voters.

Some liberal lawmakers have proposed cracking down on corporate profits amid the higher inflation. Sen. Bernie Sanders, a Vermont independent, in March proposed a 95% tax on profits in excess of companies’ pre-pandemic averages.

The president has harshly criticized what he views as profiteering amid a global crisis that could potentially push Europe and other parts of the world into a recession, saying after a speech Friday that ExxonMobil “made more money than God this year.” ExxonMobil responded by saying it has already informed the administration of its planned investments to increase oil production and refining capacity.

“There is no question that (Russian President) Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden’s letter says. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”

The letter says the administration is ready to “use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied.” It notes that Biden has already released oil from the U.S. strategic reserve and increased ethanol blending standards, though neither action put a lasting downward pressure on prices.

The president is sending the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell.

He also has directed Energy Secretary Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group that is drawn from the energy sector.

Biden is asking each company to explain to Granholm any drop in refining capacity since 2020, when the pandemic began. He also wants the companies to provide “any concrete ideas that would address the immediate inventory, price, and refining capacity issues in the coming months — including transportation measures to get refined product to market.”

There may be limits on how much more capacity can be added. The U.S. Energy Information Administration on Friday released estimates that “refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain.”

The letter says that roughly 3 million barrels a day of refining capacity around the world have gone offline since the pandemic began. In the U.S., refining capacity fell by more than 800,000 barrels a day in 2020.

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12 thoughts on “Biden tells oil refiners to produce more gas, take fewer profits

  1. Biden is delusional. Someone just said most Americans feel that Sheriff Andy Taylor is out of town and the place is being run by Barney Fife. We should be so lucky as to have even as much as Barney’s intelligence at the helm…

    1. You think Biden is bad? The only people dumber than Trump are all the people who voted for him.
      The US Oil/Gas companies had record profits in the first quarter…and their CEOs took home incredible bonuses.

  2. Exxon lost $22.4 billion in 2020; where were Biden’s complaints then? The profit margin of oil companies in 2021 was 4.7%; pretty low compared to most large businesses. Compare that to Google at 30.55%, Apple at 41.78, and Facebook (Meta) 40%. Anyone complaining about their profits? While Oil Company profits AND losses are in the billions, it is because they are such huge companies; a necessity in an industry with great risks. But we can’t expect a bottom-of-his-class student like Biden to understand this.

  3. Biden as the other Dems in Congress haven’t figured out why people
    start businesses. They don’t understand how businesses operate or why.

  4. This is merely political posturing by Biden. He wants to look like he’s doing something about the problem he has created! This article is shameful how it VERY briefly mentions government policies designed to restrict oil production and spends most of its content telling us what Biden is saying to improve things. I got news for everyone, don’t vote democrat next election unless you like having smoke blown up your backside and paying double for everything just so some mucky mucks can push their political agenda.

  5. Yeah, let’s vote for Republicans, who last I checked tried to overthrow the government and are positioning themselves to turn our democracy into a fascist state. Inflation and gas prices (which are high all over the world) will be the least of our concerns, because once you lose your vote and your voice you lose it all. And that’s where the radical right-wing Cult of Trump is taking us.

    1. You’re more than welcome to continue wearing diapers to assuage your fear, Glen. As you continue engaging in intellectual somersaults to justify why things are so god-awful right now. Jimmy Carter economy but without his fundamental honesty, decency, or likability. Or his general sympathy for the average joe.

      Or you could admit that you were wrong about Democrats like I did at some point in the late 2010s (after not having voted trump in ’16).

      Perhaps some intellectual modesty would help, combined with a healthy understanding of why a sizable majority of the country don’t believe a word the legacy media says, which includes the Associated Press.

      When the private sector serves the bidding of one political party and the two (corporations and the state) collaborate to malign and fundamentally eliminate dissidents from the public sphere, that is far closer to fascism than any of the paranoid fever dreams the legacy media and its robotic followers can dream up. A certain mid-century Austrian failed artist sought centralization of government, wealth redistribution to favor his followers, primacy of the state and favors curried to businesses who reinforced that primacy, and the elimination of opponents. Yes, we like to think of that Austrian as “right wing”. The tip of his spear was right wing but the shaft and the flabby arm holding the weapon were garden-variety leftism.

      You’re completely delusional Glen. With love from one of your Not-see neighbors.

    2. Have missed reading your thoughtful and concise statements Lauren. Wondered what had happened to you.

    3. Yes they tried to overthrow the government with American flags and posters. They didn’t loot or burn any federal buildings, that tactic goes to the left. Are they still having nightly peaceful protests in Portland. Interesting article in The Oregonian about all the empty buildings downtown that are being put up for sale due to lack of anyone wanting to open and business downtown.

  6. Biden shuts down our pipeline on day one. Than he keeps his campaign promise to wage war against the oil companies. Than he wonders why the supply of oil is down and prices of gas are up! Now he’s begging Saudi Arabia and Venezuela to bail him out.
    He’s so out of touch.
    Joe Biden is driving this country into recession, and meanwhile he just continues to look for someone to blame! Pathetic!

  7. From CNBC, Dec. 29, 2021: “U.S. oil production is back and set to increase in 2022 after more than a year of OPEC and its allies “running the show,” according to Daniel Yergin, vice chairman of IHS Markit. Output could rise by as much as 900,000 barrels per day, he told CNBC’s “Squawk Box Asia” on Wednesday. U.S. oil firms slashed production in 2020 as the coronavirus pandemic destroyed demand and supply has not yet recovered to pre-Covid levels. In 2019, the U.S. produced 12.29 million barrels of crude oil per day, according to the U.S. Energy Information Administration. That figure was 11.28 million in 2020 and is estimated to be 11.18 million in 2021 and 11.85 million in 2022. “The U.S. is back,” Yergin said. “For the last year, year and a half, it’s been OPEC+ running the show, but U.S. production is coming back already, and it’s going to come back more in 2022.”