President Joe Biden on Wednesday told the chief executives of the world’s largest oil companies he is ready to use the full force of his authority to order them to boost gas production if they will not take steps to do so themselves.
In letters to top executives at Shell, Valero, Marathon, Phillips 66, BP America, Chevron and ExxonMobil, Mr Biden noted that gasoline and diesel fuel prices have remained at record levels despite the price of crude oil having fallen significantly since reaching $120 per barrel in March.
“Today, gas prices are 75 cents higher and diesel prices are 90 cents higher. That difference — of more than 15% at the pump — is the result of the historically high profit margins for refining oil into gasoline, diesel, and other refined products,” Mr Biden wrote, adding that profit margins for refiners are at the “highest levels ever recorded”.
Many oil refineries reduced output during the Covid-19 pandemic’s peak in 2021 and 2021, and Mr Biden noted that they continued to do so after he took office to the point where refining capacity is at the lowest levels in the last five years.
“I understand that many factors contributed to the business decisions to reduce refining capacity ... but at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” he wrote. “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 raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain”.
Mr Biden told the executives they have “an opportunity to take immediate action” to increase the available supply of gasoline, diesel fuel, and other petroleum products because the high prices provide “ample market incentives” to do so.
But he also said his administration is prepared to use “all reasonable and appropriate Federal Government tools and emergency authorities” to boost near-term output and ensure adequate supplies are available across the US.
“Already, I have invoked emergency powers to execute the largest Strategic Petroleum Reserve release in history, expand access to E15 (gasoline with 15% ethanol), and authorize the use of the Defense Production Act to provide reliable inputs into energy production. I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply,” he wrote.
He added that he has directed Secretary of Energy Jennifer Granholm to convene an emergency National Petroleum Council meeting on the matter of the record-high energy prices, and requested that the executives provide her with “an explanation of any reduction in your refining capacity since 2020 and any concrete ideas that would address the immediate inventory, price, and refining capacity issues in the coming months”.