US President Joe Biden on Wednesday demanded oil refining companies explain why they are not putting more petrol on the market, sharply escalating his rhetoric against the industry as he faces pressure over rising prices.
Mr Biden wrote to executives from Marathon Petroleum Corp, Valero Energy Corp and Exxon Mobil Corp and complained they had cut back on oil refining to pad their profits, a copy of the letter seen by Reuters showed.
The letter is also being sent to Phillips 66, Chevron Corp, BP and Shell, an anonymous White House official told Reuters.
“At a time of war, refinery profit margins well above normal being passed directly on to American families are not acceptable,” Mr Biden wrote and added that the lack of refining was driving petrol prices up faster than oil prices.
Energy companies in the US are enjoying bumper profits as the Russian invasion of Ukraine has added to a supply squeeze which has driven crude oil prices above $100 a barrel and as fuel demand has remained robust, despite record-high petrol prices.
Refining capacity in the US peaked in April 2020 at a little less than 19 million barrels per day, as refiners shut several unprofitable facilities during the coronavirus pandemic. As of March, refining capacity was 17.9 million bpd, but there have been other closures announced since.
Refiners are running at near-peak levels to process fuel — currently at 94 per cent of capacity — and say there is little they can do to satisfy Mr Biden's demands.
“Our refineries are running full out,” Bruce Niemeyer, corporate vice president of strategy and sustainability at Chevron, told Reuters on the sidelines of a New York energy transition conference on Tuesday, before Mr Biden’s letter was made public.
The US president said the industry's lack of action is blunting the administration's attempts to offset the impact of oil-rich Russia's invasion of Ukraine, such as releases from the nation's oil reserves and adding more ethanol, which is cheaper, to petrol.
On Friday, the president accused the US oil industry, and Exxon Mobil Corp in particular, of capitalising on a supply shortage to fatten profits.
Mr Biden has been intensifying attacks against oil companies as prices at the pump race to record highs above $5 per gallon and inflation surges to a 40-year record.
Privately, White House officials have been reaching out to refiners to inquire about idled plants and spare capacity and whether there are other ways to increase petrol supply, said two sources familiar with the discussions.
