President Biden once again accused oil companies of not doing enough to offset soaring gas prices on Wednesday, telling the seven major refiners their profit margins were “well above normal,” as the White House continued to point fingers for economic problems everywhere but at 1600 Pennsylvania Avenue.
“[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 warned.
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.
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 in more than 40 years, has led to a dire political environment for Biden and the Democrats ahead of the fall midterm elections.
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.
Meanwhile, left-wing lawmakers have pushed punitive taxes on oil companies in response to what they consider price-gouging. In March, Sen. Bernie Sanders (I-Vt.) proposed a 95% tax on profits in excess of companies’ pre-pandemic averages. This week, Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, proposed a 21% additional tax on oil and gas companies with more than $1 billion in annual revenue.
The American Petroleum Institute blasted Biden for his blame game on Wednesday, saying “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.”
“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,” API President and CEO Mike Sommers said in a statement. “Ahead of his travel to the Middle East next month, we urge the President to prioritize unlocking U.S. energy resources – that are the envy of the world – instead of increasing reliance on foreign sources.”
In its Tuesday letter, API recommended White House actions including the resumption of oil and gas lease sales that were canceled by the White House last month, speeding up approval of liquid natural gas projects and other permitting applications, as well as lifting tariffs on steel to speed up construction of key infrastructure.
It also responded to Wyden’s tax proposal, warning that “imposing new taxes on our industry will do the exact opposite and only discourage investment at a time when it’s needed most.”
Several Republican lawmakers slammed the president’s outburst on social media.
“Biden promised to end drilling & enacted policies to restrict oil,” Sen. Tom Cotton (R-Ark.) wrote in a Tweet. “But now he mails a letter to oil firms complaining they’re not drilling enough? This isn’t just incoherence—it’s chaos. “
“Gas is over $5, rising quickly, and Biden’s response is to *mail a letter* to oil companies. What embarrassing impotence from President Biden,” he added in another post.
“Blunt inflation? Oh sure, doubling taxes on American-made oil/gas will certainly lower gas prices & encourage more production here in the U.S…..says no one,” Rep. Kevin Brady (R-Texas) posted.
Republican Mississippi Gov. Tate Reeves also joined in saying, “Biden just wrote a letter asking oil companies to produce more. It is total BS. He was JUST bragging about shutting down our off-shore leases in the Gulf. Our oil workers are furious. His prices hurt all of us. The excuses and blame-shifting are pathetic.”
Biden’s letter followed an announcement by the Energy Department on Tuesday that it was selling up to 45 million barrels of oil released from the Strategic Petroleum Reserve earlier this year. As a result of releases ordered by the White House, the reserve currently holds 511 million barrels worth of oil — its lowest level since 1987.