President Biden stepped up his rhetoric against oil companies Wednesday, telling the seven major refiners their profit margins were “well above normal” and demanding that they explain themselves to the White House.
“[A]t a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” Biden wrote in a letter to Exxon Mobil CEO Darren Woods.
Similar letters were dispatched to the heads of Chevron, Shell, Phillips 66, BP, Marathon and Valero.
“Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis and respect the critical equities of energy workers and fence-line communities,” the president added in the Woods letter, before calling on the refiner to detail “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 — including transportation measures to get refined product to market.”
“My Administration is prepared to use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied,” Biden went on.
The president has expressed increasing frustration with the petroleum industry in recent days as the average nationwide price of a gallon of gas remains above $5. During a speech at the Port of Los Angeles last week, Biden ranted that Exxon had made “more money than God this year” before adding: “Exxon, start investing and start paying your taxes.”
Record-high prices at the pump, in addition to the highest rate of annual inflation rate in more than 40 years, has led to a dire political environment for Biden and the Democrats ahead of the fall midterm election.
In response, Sen. Ron Wyden (D-Ore.), the chairman of the Senate Finance Committee, proposed a 21% additional tax on oil and gas companies with more than $1 billion in annual revenue.
While the White House has acknowledged the shock to the global oil market caused by Russia’s invasion of Ukraine, it has also accused oil companies of artificially restricting supply by refusing to drill on leasing sites approved by the federal government.
On Tuesday, the American Petroleum Institute sent a letter to the administration detailing ten steps they recommended Biden take to increase the supply — starting with the resumption of oil and gas lease sales that were canceled by the White House last month.
In response to Wyden’s tax proposal, the API warned that “imposing new taxes on our industry will do the exact opposite and only discourage investment at a time when it’s needed most.”
Biden’s letter followed an announcement by the Energy Department Tuesday that it was selling up to 45 million barrels of oil released from the Strategic Petroleum Reserve earlier this year.
Despite Biden’s plea to boost refinery capacity, the US Energy Information Administration on Friday released estimates that “refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain.” There’s also an additional complication: most US refineries are set up to process oil imported from overseas, rather than fuel produced domestically.
With Post wires