Biden Threatens Oil Companies For Not Refining More Gasoline — There’s Just One Problem

Biden Threatens Oil Companies For Not Refining More Gasoline — There’s Just One Problem

Thomas Catenacci on June 15, 2022

UPDATE: This article has been updated to include comments from Shell spokesperson Curtis Smith and American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson. 

• President Joe Biden sent letters to seven major oil companies Wednesday, saying he would take action if they didn’t boost fuel output from their domestic refineries.
• “I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” Biden wrote in the letters. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”
• “We are surprised and disappointed by the President’s letter,” American Fuel & Petrochemical Manufacturers (AFPM) President and CEO Chet Thompson said in a statement to The Daily Caller News Foundation. “Any suggestion that U.S. refiners are not doing our part to bring stability to the market is false.”

President Joe Biden wrote a letter Wednesday to oil industry executives, warning them he would take action if they don’t boost refining output, Axios reported.

Biden warned the leaders of seven major U.S. oil producers and refiners — ExxonMobil, Chevron, BP America, Shell USA, Phillips 66, Marathon and Valero — that he was “prepared to use all reasonable and appropriate Federal Government tools and emergency authorities” to increase petroleum refinery capacity and output, according to the letter obtained by Axios. The average price of gasoline nationwide hit a record $5.02 per gallon Tuesday while the average price of diesel fuel hit an all-time high of $5.78 a gallon Wednesday, according to AAA data.

“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” Biden wrote in the letters. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”

“With prices for your product where they are today, you have ample market incentive to take these actions, and I recognize that some of you have already begun to do so,” he continued.

However, U.S. refining capacity utilization surged to 91.3% in March, its highest rate since June 2021, and is expected to average 94% between July-September, according to a June 7 report from the Energy Information Administration (EIA). Refining utilization measures how much fuel refiners produce from crude oil inputs relative to their total production capacity.

The EIA noted that, while refinery utilization will continue to increase over the upcoming months, total output will remain relatively low since total domestic capacity has dropped by 900,000 barrels per day since 2019. Total U.S. operable refinery capacity peaked at nearly 19 million barrels per day in early 2020, but has since fallen to about 17.9 million barrels per day, the latest federal data showed.

“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,” Shell spokesperson Curtis Smith told The Daily Caller News Foundation in an email. “Those efforts include accelerating new and existing production of crude oil in the Gulf of Mexico and repurposing an idled refinery in Louisiana (Convent) that will produce lower-carbon fuels and products.”

In addition, the last major refinery to be constructed in the U.S. was Marathon Oil’s facility built in Louisiana in 1977. Industry groups and experts blamed the declining capacity and lack of new refineries on environmental regulation and projected fuel demand decline in the future as governments push green energy alternatives.

“We are surprised and disappointed by the President’s letter,” American Fuel & Petrochemical Manufacturers (AFPM) President and CEO Chet Thompson said in a statement to TheDCNF. “Our team at AFPM has been working closely with the Administration—as recently as this week—providing industry insights and policy recommendations to address the global energy challenge. Any suggestion that U.S. refiners are not doing our part to bring stability to the market is false.”

“We would encourage the Administration to look inward to better understand the role their policies and hostile rhetoric have played in the current environment,” he continued.

Mike Sommers, the CEO of the American Petroleum Institute, added that his group appreciated the opportunity for dialogue with the White House but that 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” in a statement.

Biden added in his letters that Energy Secretary Jennifer Granholm will host an emergency meeting on domestic refining capacity.

The White House, Energy Department and five companies Biden wrote to Wednesday didn’t immediately respond to requests for comment from TheDCNF. BP America declined to comment.