Chevron, More Oil Companies Push Back on Biden's Warning Letter

Chevron, More Oil Companies Push Back on Biden's Warning Letter
Gas prices nearing $5.00 a gallon are displayed at Chevron and Shell stations in San Francisco, Calif., on July 12, 2021. (Justin Sullivan/Getty Images)
Jack Phillips

Chevron this week released a statement addressing President Joe Biden's letter to oil companies that suggested he may take executive action amid record-high gas prices.

“We understand the significant concerns around higher fuel prices currently faced by consumers around the country, and the world. We share these concerns, and expect the Administration’s approach to energy policy will start to better reflect the importance of addressing them,” Chevron said in a statement to Biden.

The president sent letters Wednesday to Marathon Petroleum Corp., Valero Energy Corp., ExxonMobil, Phillips 66, Chevron, BP, and Shell to demand action on lowering gas prices. He asked why oil companies are not refining more and claimed they are reaping windfall profits.

"At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable," Biden wrote, according to the letter. This week, White House press secretary Karine Jean-Pierre stated that oil producers have a "patriotic duty" to increase refining capacity, although she told a reporter Thursday that the United States doesn't need to be drilling more to deal with the record prices at the pump.

Chevron further said that since Biden took office in January 2021, his administration has signaled that it will "impose obstacles to our industry delivering energy resources the world needs."

While the firm did not elaborate, it may have been referring to a flurry of executive orders targeting the oil industry such as killing the Keystone XL pipeline, suspending new oil drilling leases on federal lands, and ending fossil fuel subsidies used by certain agencies, among other measures.

Chevron also stated it will increase its Permian Basin production by 15 percent in 2022, while other oil firms have said they've already increased capacity in light of the gas prices.

"Our refineries are running full out," Bruce Niemeyer, corporate vice president of strategy and sustainability at Chevron, told the Reuters news agency on Tuesday. Meanwhile, Shell told the news outlet that it is "producing at capacity" and looking at options to increase oil production.

ExxonMobil also issued a response to Biden's letter and provided what it described as short-term and long-term solutions.

“In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions—such as waivers of Jones Act provisions and some fuel specifications to increase supplies,” the energy company said in a news release Wednesday.

In the longer term, the federal government “can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines,” according to ExxonMobil.