“At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” the President writes in a letter dated Tuesday that was sent to seven companies. “There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing. But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”
He adds, “The lack of refining capacity — and resulting unprecedented refinery profit margins — are blunting the impact of the historic actions my Administration has taken to address Vladimir Putin’s Price Hike and are driving up costs for consumers.”
The President and his team have acknowledged in recent weeks that there is not much he can do to address soaring prices, and the actions he has taken so far, such as a record-breaking release of oil from the country’s strategic reserves, have not worked.
A number of factors have driven the price spike, including increased demand following Covid-19 lockdowns in previous years and the return of commuters into offices. But the White House has mainly tried to turn the focus on Russia’s war in Ukraine, and has accused oil companies of trying to bank massive profits off of Putin’s aggression.
Biden’s letter on Tuesday was sent to seven oil companies: Marathon Petroleum Corp, Valero Energy Corp, ExxonMobil, Phillips 66, Chevron, BP, and Shell. While Biden urged the companies to take “immediate actions to increase the supply of gasoline, diesel, and other refined product,” the President also said the federal government is ready to use additional emergency powers to boost refinery capacity and output.
“In addition 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,” he writes. “I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply.”
Biden writes that he’s directed Energy Secretary Jennifer Granholm to hold an emergency meeting on the issue as well as engage with the National Petroleum Council. Ahead of the meeting, Biden asks the companies to provide Granholm with “an explanation of 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.”
“The crunch that families are facing deserves immediate action. 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,” Biden writes.
The energy industry fears a repeat of 2020, when it overinvested in fracking and refining at a time when demand evaporated. Several US energy companies went bankrupt, and access to Wall Street’s money evaporated.
Despite record gasoline prices and surging oil and natural gas prices, the energy industry has been far more cautious about expanding this time around. It also knows that regulations and consumer demand will force it to invest in cleaner energy projects. Meanwhile, others see an opportunity abroad, where energy prices are higher than in the United States and capacity has been even more constrained as Europe attempts to move beyond Russian oil and gas.
In Washington, progressive Democrats, led by Massachusetts Sen. Elizabeth Warren, have called for a windfall profit tax on energy companies that would help offset the rising cost of fuel for Americans. But with little prospect of that passing Congress, Biden is resorting to demanding action that he is almost certainly aware oil companies will reject.
CNN’s David Goldman contributed to this report.
