Biden tells US oil refiners rising earnings ‘not acceptable’ as warfare rages


US president Joe Biden on Wednesday took intention at refiners for not producing extra petrol, saying their rising revenue margins “at a time of war” have been “not acceptable”.

In letters despatched to seven oil corporations together with ExxonMobil, BP, Shell and Valero, Biden referred to as for “immediate actions” to provide extra gas, and stated the administration was ready to make use of “all reasonable and appropriate” instruments to assist enhance provide within the close to time period.

Biden referred to as on the refiners to clarify why they’d shut down some crops that make gas, which had contributed to “an unprecedented disconnect between the price of oil and the price of gas”.

“There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their refineries are bearing,” the president wrote. “But amid a war that has raised gasoline prices more than $1.70 a gallon, historically high refinery profit margins are worsening that pain.”

Neither the businesses nor their commerce teams instantly responded to requests for remark.

Analysts stated the letters have been one other effort to shift blame for an oil market rally that has prompted US petrol costs to greater than double since Biden entered workplace final yr, hitting a document excessive above $5 a gallon final week.

American petrol costs, equal to about £1.07 per litre, stay properly beneath ranges in Europe, however have fuelled decades-high economy-wide inflation within the US, sapping Biden’s approval rankings forward of essential midterm elections this yr.

Some US oil corporations and refineries are reporting document money flows as hovering world demand for his or her merchandise, coupled with tepid provide progress, helps push crude and petrol costs to multi-year highs.

In a bid to drive down crude costs, the White House has since August repeatedly referred to as on Opec+ producers to extend provide, launched document quantities of oil from a federal strategic petroleum stockpile, and just lately loosened air pollution controls on petrol blends.

Biden may even journey to Saudi Arabia, the world’s high oil exporter, subsequent month throughout a visit to the Middle East — a part of a thawing of relations between the White House and the Saudi courtroom.

Oil costs have doubled because the begin of 2021, together with the sharp rise this yr following Moscow’s invasion of Ukraine and a widening embargo on Russian crude.

The Biden administration has additionally referred to as on US shale producers to extend manufacturing, reversing earlier efforts to restrict drilling. US oil output stays properly beneath the highs struck earlier than the pandemic.

US refining capability averaged 18.8mn barrels a day in 2019 however has fallen beneath 18mn b/d this yr — due partially to the collapse of refining margins throughout the pandemic and the excessive price of sustaining operations, analysts say.

Global refiners’ output has additionally decreased due to a drop in refined merchandise from China. Sanctions on Russia threaten to tighten provides additional.

Analysts stated there was little refiners within the US might do within the brief time period to repair the shortages — and that including new capability could compromise their local weather pledges.

“There’s no refining capacity sitting on the sidelines idle that would not require a lot of time and money to restart, meaning it can’t help during the summer at the very least,” stated Robert Campbell, head of vitality transition analysis at Energy Aspects.

For some that just lately shut refineries, equivalent to Shell, resuming operations would considerably enhance their greenhouse fuel emissions, Campbell stated, including that doubts about long-term oil demand made pricey investments tough.

“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” Biden wrote in his letters, which have been additionally despatched to Marathon Petroleum, Phillips 66 and Chevron. “But at a time of war, refinery profit margins well above normal being passed directly on to American families are not acceptable.”