Biden beats oil companies for greed at the pump.

WASHINGTON — President Biden has chastised some of the biggest oil companies for profiting from rising energy prices and “making that pain worse” for consumers as he increased pressure on them to increase refining capacity and raise costs at the pump reduce.

As the average price of gas in the United States tops $5 a gallon for the first time, Mr. Biden pointed the finger at energy companies in a letter to seven top executives Tuesday. He asked them to explain their decision to cap refinery capacity and announced his government would hold an “emergency meeting” to discuss ways to contain the crisis.

“In times of war, refinery profit margins that are well above normal and passed directly to American families are unacceptable,” Biden said in the letter. “There is no question that Vladimir Putin is largely responsible for the tremendous financial pain the American people and their families are enduring. But in the midst of a war that has raised gasoline prices by more than $1.70 a gallon, historically high refinery profit margins are compounding that pain.”

The letter, which was sent to executives at BP, Chevron, Exxon Mobil, Marathon Petroleum, Phillips 66, Shell and Valero Energy, adds to the president’s efforts in recent weeks to pin at least some blame on companies raking in billions in profits while he diverts any responsibility from its administration. Soaring gas prices have contributed to a fall in Mr Biden’s approval ratings ahead of the fall midterm elections.

The president argued in the letter that the companies had failed to restore the refining capacity they had reduced at the start of the pandemic, leaving it at its lowest level in more than half a decade. At the same time, it said, there is “an unprecedented discrepancy between the price of oil and the price of gas,” noting that the last time crude oil prices hit $120 a barrel in March the gas price at the pump was $4.25 $. But today gas prices are 75 cents higher.

“This difference — of more than 15 percent at the pump — is a result of historically high profit margins for refining oil into gasoline, diesel and other refined products,” Biden said. “Since the beginning of the year, refinery margins for gasoline and diesel refining have tripled and are currently at their highest levels on record.”

House Democrats passed legislation last month authorizing Mr Biden to declare an energy emergency and crack down on companies believed to be excessively raising prices, but it looks unlikely to pass the Senate. Republicans have claimed that Mr. Biden’s energy and climate policies are at least partly to blame for soaring gas prices and accused the president of undermining America’s energy industry.

Mike Sommers, president of the American Petroleum Institute, countered that the government shares the blame for higher energy prices and called for new well leases to be approved and “critical energy infrastructure” like pipelines to be approved.

“Ahead of his trip to the Middle East next month,” Mr. Sommers said in a statement, “we urge the President to prioritize the development of U.S. energy resources that the world envies, rather than reliance on foreign sources.” raise.”

Energy experts said Mr. Biden’s letter was another example of efforts by Democrats and Republicans to blame rising gas prices.

“It’s part of the combative narrative that it’s the fault of the refiners and the oil companies,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “The Republican narrative is that it’s all Biden’s fault, and that’s not true. But it’s also not true that refiners have conspired to raise prices, he said.

The United States has lost 5.9 percent of its refining capacity since 2019 as refineries restructured to make new products or closed because their expenses exceeded revenues.

For example, late next year executives plan to close the LyondellBasell refinery in Houston because it faces $1.5 billion in expenses to meet clean air standards. The company tried to sell the facility, but nobody was interested in buying it.

According to Turner, Mason & Company, a Texas consulting firm, the trend is part of a global shift in petroleum refining, moving away from North America and Europe toward Asia and the Middle East. Refineries have shut down at least nine plants in the United States in the past three years. Many could no longer be operated economically and were converted to process biofuels.

The Covid-19 pandemic, which has eroded demand for fuel amid a slowing economy, accelerated decisions by executives who argued that a rebound in future sales is in doubt as government policy favors more efficient and electric vehicles.

No new American refineries have been built in decades.

Holly Frontier, Marathon, PBF, Phillips 66 and Shell are among the refiners that have closed plants in Wyoming, New Mexico, North Dakota, New Jersey, Pennsylvania and Louisiana. Some refiners, like Shell, said they are trying to reduce their emissions of greenhouse gases that cause climate change. Others, like PBF, said the operations they are closing are no longer profitable.

At least four other refineries in Montana, Oklahoma, Alabama and California are geared towards downsizing and switching from conventional fuels to renewable diesel.

In a bid to slash oil prices, the Biden administration could relax permitting requirements to reopen an accident-prone refinery in St. Croix, U.S. Virgin Islands, that has a poor environmental record. Such an action would likely provoke strong protests from environmentalists, as the refinery repeatedly released sulfur dioxide into the air and rained a fine mist of oil over surrounding homes.

Global fuel markets have tightened since Russia’s invasion of Ukraine in February, and refiners are struggling to keep up with growing demand as much of the world recovers from the worst of the pandemic.

Overall, global refining capacity has increased by less than 1 percent over the past three years. Refining capacity in Europe has fallen 5.7 percent, compounding the continent’s problems as European countries try to wean themselves off Russian energy.

That has opened up opportunities for oil companies in the Middle East, which have increased their refining capacity by nearly 13 percent over the past three years.

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