US President Joe Biden is demanding that oil refinery companies explain why they are earning record profits even though they have not augmented the nation’s fuel supply over the past several months.
In a letter sent on Wednesday, June 15th, to the chief executives of Marathon Petroleum Corporation, Valero Energy Corporation, and Exxon Mobil Corporation, Biden declared that these major oil refineries were cutting back on output to increase their profits.
The President added that, given the tumultuous state of global affairs, the way these companies’ profit margins are way above average levels is putting a strain on American households. Indeed, the lack of output from the refining sector has driven the price of fuel faster than oil prices on the global market.
The industry’s apparent nonchalance at the impact of soaring fuel prices on ordinary citizens has also been called out. It is seen as a setback against the US government’s initiatives for offsetting the Russian invasion of Ukraine’s economic impact, including releasing oil from the country’s reserves and adding ethanol to commercial fuels.
As of press time, a copy of the letter was also sent to the leading fuel companies, British Petroleum, Chevron Corporation, Phillips 66, and Shell.
A ‘Patriotic’ Duty
Biden’s letter appealed to the companies above’s sense of patriotism. According to White House spokesperson Karine Jean-Pierre, the President reminded oil refineries that they have a duty to the American people to increase fuel supply and reduce the costs passed on to consumers.
In April 2020, the capacity of the US refining industry peaked at slightly under 19 million barrels a day (bpd.) At the time, fuel prices hit pandemic-driven lows, forcing refiners to close down unprofitable facilities.
But now, the industry is complaining that their refineries are running full out. Chevron’s corporate vice-president for strategy and sustainability, Bruce Niemeyer, spoke of the matter at a recent energy transition conference held by news agency Reuters last June 13th.
As of press time, oil refining companies are producing near full capacity – around 94% – but company executives say they cannot work fast enough to comply with demands from Washington.
While Shell is currently looking at how it can increase its oil and gasoline production, Exxon announced that it is working on increasing its production by 250,00bpd thanks to a recent investment in refining technology and machinery.