The supplemental rule comes as President Biden has accused oil companies of “war profiteering” and raised the possibility of imposing a windfall tax on energy companies if they don’t boost domestic production.
The production cut threatens a global economy already destabilized by the Ukraine conflict and risks saddling Biden and Democrats with newly rising gasoline prices just ahead of the U.S. midterm elections.
The refinery produces about 435,000 barrels per day and provides about 20% to 25% of the refined gasoline, jet fuel, and diesel used by Illinois, Indiana, Michigan, and Wisconsin.
While the Inflation Reduction Act concentrates on clean energy incentives that could drastically reduce overall U.S. emissions, it also buoys oil and gas interests by mandating leasing of vast areas of public lands and off the nation’s coasts.
The breakthrough spending deal reached by Sens. Joe Manchin and Chuck Schumer would commit a historic $370 billion to combat climate change, but it comes at a cost that some green activists are finding impossible to accept.
President Joe Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume.
A White House desperate to bring down gas prices is having little success persuading refinery owners to expand operations, and more closures are imminent.
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.
Todd Borgmann, Calumet’s former CFO, was promoted to CEO effective this week. The move, and several other executive-level changes, were triggered by the May 1 retirement of board chairman Fred Fehsenfeld.
The release of reserves in the U.S. could create pressures that could reduce oil prices, though Biden has already twice ordered releases from the strategic reserves without causing a meaningful shift in oil markets.
Obstacles to more U.S. oil are surmountable, according to analysts, yet will take months to work through and it could be late this year or early next before a significant production increase materializes.
A further round of talks between Russian and Ukrainian officials on Monday will focus on discussing a potential ceasefire with an immediate withdrawal of troops and security guarantees, Ukraine negotiator Mykhailo Podolyak said.
Economists say the one-two punch of rising prices and the intensifying geopolitical crisis could put the brakes on the rapid rebound and raise the risks of recession.
The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday, rising by 10 cents in one day, and up 55 cents since last week, according to auto club AAA.
Oil prices soared early Monday before retreating. Benchmark U.S. crude surged to $130 a barrel overnight, then moderated to around $119, a 3% gain, in afternoon trading. The international price skyrocketed to $139 before falling back to about $123 a barrel.
Markets worldwide have swung wildly recently on worries about how high prices for oil, wheat and other commodities produced in the region will go because of Russia’s invasion, inflaming the world’s already high inflation.
The surge followed a warning from Russian President Vladimir Putin that Ukrainian statehood was imperiled as Russian forces battered strategic locations.
The leaders of OPEC and its oil-producing allies plan to gradually increase oil production while Russia’s invasion of Ukraine rattles markets, reshapes alliances, kills civilians and sends the price of crude skyrocketing.
All 31 member countries of the International Energy Agency have agreed to release oil from their strategic reserves—half of that from the United States—“to send a strong message to oil markets” that there will be “no shortfall in supplies.”
Market benchmarks in Europe and Asia fell by more than 4% as traders tried to figure out how large Russia’s incursion would be and the scale of Western retaliation. Wall Street futures sank, indicating that U.S. shares were likely to retreat after trading opens.
