President Joe Biden on Wednesday called on U.S. oil refineries to produce more gasoline and diesel, saying profits have tripled during a time of war between Russia and Ukraine as Americans struggle with prices records at the bomb.
“The crisis facing families deserves immediate action,” Biden wrote in a draft letter to The Associated Press. “Your companies need to work with my administration to provide concrete short-term solutions to the crisis.”
Gasoline prices nationwide are averaging about $ 5 a gallon, an economic burden for many Americans and a political threat to fellow Presidential Democrats running in the midterm elections. Wider inflation began to rise last year as the US economy recovered from the coronavirus pandemic, but accelerated in recent months as energy and food prices increased after Russia invaded Ukraine in February and disrupted world commodity markets.
The government reported on Friday that consumer prices had risen 8.6% from a year ago, the worst increase in more than 40 years.
The draft letter notes that gas prices averaged $ 4.25 a gallon when oil last approached the current price of $ 120 a barrel in March. This 75-cent difference in average gas prices in a matter of months reflects both the refinery’s scarcity of capacity and the profits that “are currently at their highest levels ever recorded,” the letter states.
As Biden sees it, refineries are taking advantage of the uncertainties caused by “a time of war.” His message that corporate greed is contributing to rising prices has been controversial among many economists, but the claim may have some resonance among voters.
Some Liberal lawmakers have proposed cracking down on corporate profits amid rising inflation. Senator Bernie Sanders, a Vermont independent, proposed in March a 95% tax on above-average corporate profits before the pandemic.
The president has harshly criticized what he sees as a profit amid a global crisis that could push Europe and other parts of the world into recession, saying after a speech on Friday that ExxonMobil “made more money than God this year”. ExxonMobil responded by saying that it has already informed the administration of its planned investments to increase oil production and refining capacity.
“There is no doubt that (Russian President) Vladimir Putin is primarily responsible for the intense financial pain of the American people and their families,” says Biden’s draft letter. “But in the midst of a war that has raised gasoline prices by more than $ 1.70 a gallon, the refinery’s historically high profit margins are exacerbating this pain.”
The letter states that the administration is prepared to “use all reasonable and appropriate tools and emergency authorities of the federal government to increase the capacity and production of the refinery in the short term and to ensure that all regions of this country are properly supplied “. He notes that Biden has already released oil from the U.S. Strategic Reserve and raised ethanol blending standards, although neither action has put lasting downward pressure on prices.
The chairman sends the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell.
He also ordered Secretary of Energy Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group from the energy sector.
Biden asks every company to explain to Granholm any decline in refining capacity since 2020, when the pandemic began. He also wants companies to provide “any concrete ideas that address the immediate problems of inventory, price and refining capacity in the coming months, including transportation measures to bring the refined product to market.”
There may be limits on how much more capacity can be added. The U.S. Energy Information Administration released estimates on Friday that “refinery utilization will reach an average monthly level of 96% twice this summer, close to the upper limits of what refineries can consistently maintain.”
The draft letter notes that approximately 3 million barrels a day of refining capacity worldwide have been disconnected since the pandemic began. In the US, refining capacity fell by more than 800,000 barrels a day by 2020.