Joe Biden tells oil refiners: Produce more gas, fewer profits
President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record-high prices at the pump. “The crunch that families are facing deserves immediate action,” Biden wrote in a letter to seven oil refiners. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.” Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for the president’s fellow Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, but it accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets. The government reported on Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years. The letter notes that gas prices were averaging $4.25 a gallon when oil was last near the current price of $120 a barrel in March. That 75-cent difference in average gas prices in a matter of just a few months reflects both a shortage of refinery capacity and profits that “are currently at their highest levels ever recorded,” the letter states. The American Petroleum Institute, which represents the industry, said in a statement that capacity has been diminished as the Biden administration has sought to move away from fossil fuels as part of its climate change agenda. “While we appreciate the opportunity to open increased dialogue with the White House, 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 needs while reducing emissions,” API CEO Mike Sommers said in a statement. Sommers added, “I reinforced in a letter to President Biden and his Cabinet yesterday ten meaningful policy actions to ultimately alleviate pain at the pump and strengthen national security, including approving critical energy infrastructure, increasing access to capital, holding energy lease sales, among other urgent priorities.” The letter is unlikely to start a chain of events that would boost supplies. Refineries have gone through unprecedented, unplanned maintenance globally in the last three months and there is an extreme shortage being felt across the globe, said Claudio Galimberti, senior vice president at Rystad Energy. China’s decision to limit its exports of oil products also contributed to the problem, he said. “U.S. refiners cannot increase capacity beyond current levels,” Galimberti said. “If they could, they would have done it already.” As Biden sees it, refineries are capitalizing on the uncertainties caused by “a time of war.” His message that corporate greed is contributing to higher prices has been controversial among many economists, yet the claim may have some resonance with voters. Some liberal lawmakers have proposed cracking down on corporate profits amid the higher inflation. Sen. Bernie Sanders, a Vermont independent, in March proposed a 95% tax on profits in excess of companies’ pre-pandemic averages. The president has harshly criticized what he views as profiteering amid a global crisis that could potentially push Europe and other parts of the world into a recession, saying after a speech Friday that ExxonMobil “made more money than God this year.” ExxonMobil responded by saying it has already informed the administration of its planned investments to increase oil production and refining capacity. “There is no question that (Russian President) Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden’s letter says. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.” The letter says the administration is ready 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.” It notes that Biden has already released oil from the U.S. strategic reserve and increased ethanol blending standards, though neither action put a lasting downward pressure on prices. There’s little the government can do to lower prices, other than release oil from the strategic reserve, and that’s already been done, said Jim Burkhard, vice president at IHS Markit. If Biden had not done that, prices would be even higher today, he added. “No government can simply conjure up new supply,” Burkhard said. “One thing that may help would be to have a more constructive relationship with the U.S. oil industry, because it’s been somewhat antagonistic so far.” The president sent the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP, and Shell. He also has directed Energy Secretary Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group that is drawn from the energy sector. Biden is asking each company to explain to Granholm any drop in refining capacity since 2020, when the pandemic began. He also wants the companies to provide “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.” There may be limits on how much more capacity can be added. The U.S. 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.” The letter says that roughly 3 million barrels a day of refining capacity around the world have gone offline since the pandemic began. In the U.S., refining capacity fell by more than 800,000 barrels a day in 2020. Republished with the permission of The Associated Press.
Joe Biden, ‘We can’t wait any longer’ to address climate crisis
In the most ambitious U.S. effort to stave off the worst of climate change, President Joe Biden signed executive orders Wednesday to transform the nation’s heavily fossil-fuel powered economy into a clean-burning one, pausing oil and gas leasing on federal land and targeting subsidies for those industries. The directives aim to conserve 30 percent of the country’s lands and waters in the next 10 years, double the nation’s offshore wind energy, and move to an all-electric federal vehicle fleet, among other changes. Biden’s sweeping plan is aimed at staving off the worst of global warming caused by burning fossil fuels. But his effort also carries political risk for the president and Democrats as oil- and coal-producing states face job losses from moves to sharply increase U.S. reliance on clean energy such as wind and solar power. “We can’t wait any longer″ to address the climate crisis, Biden said at the White House. ”We see with our own eyes. We know it in our bones. It is time to act.″ He said his orders will “supercharge our administration’s ambitious plan to confront the existential threat of climate change.” Biden has set a goal of eliminating pollution from fossil fuel in the power sector by 2035 and from the U.S. economy overall by 2050, speeding what is already a market-driven growth of solar and wind energy and lessening the country’s dependence on oil and gas. The aggressive plan is aimed at slowing human-caused global warming that is magnifying extreme weather events such as deadly wildfires in the West and drenching rains and hurricanes in the East. Biden acknowledged the political risk, repeatedly stating his approach would create jobs in the renewable energy and automotive sectors to offset any losses in oil, coal, or natural gas. “When I think of climate change and the answers to it, I think of jobs,″ Biden said. “These aren’t pie-in-the-sky dreams. These are concrete actionable solutions. And we know how to do this.″ In a change from previous administrations of both parties, Biden also is directing agencies to focus help and investment on the low-income and minority communities that live closest to polluting refineries and other hazards, and the oil- and coal-patch towns that face job losses as the U.S. moves to sharply increase its reliance on wind, solar and other energy sources that do not emit climate-warming greenhouse gases. Biden pledged to create “millions of good-paying, union jobs” building electric cars, installing solar panels and wind turbines, and performing specialized work to cap abandoned wells, restore mine-scarred land and turn old industrial sites “into the new hubs of economic growth.″ Even so, Republicans immediately criticized the plan as a job killer. “Pie-in-the-sky government mandates and directives that restrict our mining, oil, and gas industries adversely impact our energy security and independence,″ said Rep. Cathy McMorris Rodgers of Washington state, the top Republican on the House Energy and Commerce Committee. Biden also is elevating the warming climate to a national security priority, directing intelligence agencies, the military, and others to do more to prepare for the heightened risks. The conservation plan would set aside millions of acres for recreation, wildlife, and climate efforts by 2030 as part of Biden’s campaign pledge for a $2 trillion program to slow global warming. President Donald Trump, who ridiculed the science of climate change, withdrew the U.S. from the Paris global climate accord, opened more public lands to coal, gas, and oil production, and weakened regulation on fossil fuel emissions. Experts say these emissions are heating the Earth’s climate dangerously and worsening floods, droughts, and other natural disasters. Currently, 61% of the nation’s electric power comes from natural gas and coal, 20% from nuclear, and 17% from wind, solar and other renewable energy, the U.S. Energy Information Administration says. Georgia Tech climate scientist Kim Cobb said that “if this Day 7 momentum is representative of this administration’s 4-year term, there is every reason to believe that we might achieve carbon neutrality sooner than 2050,” even as key roadblocks lie ahead. Biden’s actions came as his nominee for energy secretary, former Michigan Gov. Jennifer Granholm, faced deep skepticism from Republicans as she tried to pitch the president’s vision for a green economy. “The last Democratic administration went on a regulatory rampage to slow or stop energy production,” said Wyoming Sen. John Barrasso, a leading Republican on the Senate Energy and Natural Resources Committee. “I’m not going to sit idly by … if the Biden administration enforces policies that threaten Wyoming’s economy.″ Granholm, whose state was devastated by the 2008 recession, promoted emerging clean energy technologies, such as battery manufacturing, as an answer for jobs that will be lost as the U.S. transitions away from fossil fuels. Former Secretary of State John Kerry, now Biden’s climate envoy, said oil, gas, and coal workers “have been fed a false narrative″ that ”somehow, dealing with climate is coming at their expense. No, it’s not. What’s happening to them is happening because of other market forces already taking place.″ Instead of possible black lung disease, a miner would have a brighter future as a solar power technician, Kerry said. “The same people can do those jobs, but the choice of doing the solar power one now is a better choice.″ The oil industry said curtailing domestic production will lead to an increase in imported oil. “I don’t think any American wants to go back to the days of being held hostage to foreign entities that don’t have America’s best interest at heart as we lose American energy leadership,” said Mike Sommers, president of the American Petroleum Institute. Sommers and other industry leaders warned that states could lose hundreds of thousands of jobs and critical funding. Nearly one-third of New Mexico’s state budget comes from oil and gas, said Ryan Flynn, president of the New Mexico Oil and Gas Association. Biden’s directive to double energy production from offshore wind comes after the Trump administration slowed permit review of some giant offshore wind turbine projects. Significantly, he is directing agencies
