Biden Tells Big Oil That Record Profits ‘Not Acceptable’ Amid Soaring Gas Prices

Biden Tells Big Oil That Record Profits ‘Not Acceptable’ Amid Soaring Gas Prices
A driver unloads raw crude oil from his tanker to process into gas at Marathon Refinery in Salt Lake City, Utah, on May 24, 2022. (George Frey/Getty Images)
Tom Ozimek
6/15/2022
Updated:
6/15/2022
0:00

President Joe Biden is looking to jawbone U.S. oil companies into boosting gasoline and diesel supply amid soaring prices, calling on executives to expand refining capacity while blasting refiners for enjoying record profits while U.S. drivers face pain at the pump.

Biden made the remarks in a letter to oil executives, seen by The Epoch Times, in which the president demanded an explanation for any oil refining capacity cuts they had made since 2020 while alleging that they had cut back on refining to bolster bottom lines.

“I understand that many factors contributed to the business decisions to reduce refinery capacity,” Biden wrote. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”

Since Russia’s invasion of Ukraine at the end of February, the average gasoline price in the United States has jumped by more than $1.70 per gallon, with Biden blaming the conflict for the “intense financial pain the American people and their families are bearing,” arguing that “historically high refinery profit margins are worsening that pain.”

Biden’s rhetoric in the letter builds on prior statements that show he has taken big oil into his crosshairs for what he has described as “price gouging.”

The American Petroleum Institute (API), a fossil fuel industry lobby group, has responded to the Biden administration’s line of attack while arguing for policies that would unlock U.S. energy production.

“Americans are looking for inflation solutions, not finger pointing,” API said in a recent statement. “The price at the pump is a function of increased demand and lagging supply combined with geopolitical turmoil. Lawmakers should focus on policies that increase US supply rather than political grandstanding.”
In a 10-point plan “to unlock American energy, fuel economic recovery, and strengthen national security,” API called on Biden to lift development restrictions on federal land and waters, streamline approvals for critical energy infrastructure projects, and bolster investment and access to capital by reducing other regulatory burdens.

As the price of crude soared higher than $100 per barrel this year, oil companies have made historic profits, while U.S. drivers reel under the strain of dizzying gasoline prices, which have jumped to record highs of more than $5 per gallon.

The top five U.S. oil companies made total profits of around $35 billion in the first quarter of 2022, about 300 percent more than in the comparable quarter last year. At the same time, the top 28 global oil and gas companies have made nearly $100 billion in combined profits in the first three months of 2022.

Much of the profit has been used for share buybacks rather than capital expenditures to expand refining capacity, although the U.S. Energy Information Administration (EIA) said in a recent note that it expects high refinery margins to lead to higher fuel production.

“We expect wholesale prices for gasoline and diesel will begin decreasing in the third quarter of 2022, as refinery production increases,” the EIA wrote.

Biden wrote in the letter that his administration is prepared to take any “reasonable and appropriate” steps to help refiners boost output in the near term.

“I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply,” he wrote, while calling on oil executives to put forward “any concrete ideas” that would boost inventory and refining capacity.

Energy Secretary Jennifer Granholm will hold an emergency meeting on the matter in the coming days, Biden said.

Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.
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