With the average price of gas in the United States exceeding $ 5 a gallon for the first time, Mr. Biden pointed the finger at energy companies in a letter to seven top executives on Tuesday. He demanded that they explain their decision to limit refining capacity and announced that his government would hold an “emergency meeting” to discuss ways to reduce the crisis. “In times of war, refineries’ profit margins far above normal being passed directly to American families are unacceptable,” Biden said in the letter. “There is no doubt that Vladimir Putin is primarily responsible for the intense economic suffering of the American people and their families. “But in the midst of a war that has pushed gasoline prices above $ 1.70 a gallon, the refinery’s historically high profit margins are exacerbating that pain.” The letter, which was sent to executives at BP, Chevron, Exxon Mobil, Marathon Petroleum, Phillips 66, Shell and Valero Energy, extends the president’s effort in recent weeks to place at least some of the blame on companies with billions in profits. while diverting any responsibility from its administration. Rising gas prices have helped slide Mr Biden’s approval ratings ahead of the autumn midterm elections. The president claimed in the letter that the companies had failed to restore the refining capacity they had reduced in the previous days of the pandemic, leaving it at its lowest level in more than half a decade. At the same time, he noted that there is “an unprecedented disconnect between the price of oil and the price of gas”, noting that the last time the price of crude reached $ 120 a barrel, in March, the price of gas at the pump was $ 4.25. But today, gas prices are 75 cents higher.
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“This difference – more than 15 percent at the pump – is the result of historically high profit margins for refining oil into petrol, diesel and other refining products,” Biden said. “Since the beginning of the year, refinery margins for gasoline and diesel refining have tripled and are currently at their highest levels ever.” House Democrats passed a bill last month authorizing Biden to declare an energy emergency and crack down on companies deemed to be raising prices too high, but seem unlikely to pass the Senate. Republicans have argued that Biden’s energy and climate policies are at least partly responsible for the rise in gas prices, accusing the president of undermining America’s energy industry. Mike Somers, president of the American Petroleum Institute, reacted by saying the government shared responsibility for higher energy prices and called for the approval of new drilling leases and the approval of “critical energy infrastructure” such as pipelines. “In view of his trip to the Middle East next month,” Somers said in a statement. Energy experts say Mr Biden’s letter was another example of Democrats and Republicans trying to take responsibility for rising gas prices. “It’s part of the militant narrative that the refinery, the oil companies, are to blame,” said Tom Kloza, head of global energy analysis at the Oil Price Information Service. “The Republican narrative is that Biden is to blame for everything and that is not true. “But it is also not true that refineries have conspired to raise prices,” he said. The United States has lost 5.9% of its refining capacity since 2019, as refineries have been restructured to produce new products or closed because their costs exceeded revenues. Late next year, executives plan to close the Lyondell-Basell refinery in Houston, for example, because they are spending $ 1.5 billion to meet Clean Air standards. The company tried to sell the factory, but no one was interested in buying it. The trend is part of a global shift in oil refining that is shifting from North America and Europe to Asia and the Middle East, according to Turner, Mason & Company, a Texas consulting firm. Refineries have shut down at least nine plants in the past three years in the United States. Many could no longer operate profitably and were relocated for biofuel processing. The Covid pandemic, which downgraded fuel demand as the economy shrank, hastened the decisions of executives who argued that the recovery in future sales was questionable, as government policies favored more efficient and electric vehicles. No new American refinery has been built in decades. Holly Frontier, Marathon, PBF, Phillips 66 and Shell are among the refineries that have closed plants in Wyoming, New Mexico, North Dakota, New Jersey, Pennsylvania and Louisiana. Some refineries, such as Shell, have said they are trying to reduce greenhouse gas emissions from climate change. Others, such as PBF, said the closures were no longer profitable. At least four more refineries in Montana, Oklahoma, Alabama and California are set to cut and convert from conventional fuels to renewable diesel. As it seeks to reduce oil prices, the Biden government could relax regulations allowing a crash refinery in St. Louis to reopen. Croix, which has a faulty environmental history. Such an action would likely spark strong protests from environmentalists, as the refinery repeatedly released sulfur dioxide into the air and dropped a thin layer of oil fog over surrounding houses. Global fuel markets have been tightened by the Russian invasion of Ukraine in February, and refineries are struggling to keep up with growing demand as much of the world recovers from the worst of the pandemic. Overall, there has been less than one percent increase in refinery capacity worldwide in the last three years. Refinery capacity in Europe has shrunk by 5.7%, exacerbating the continent’s problems as European countries try to wean themselves off Russian energy. This has opened up new opportunities for Middle Eastern oil companies, which have increased the capacity of their refineries by almost 13 percent in the last three years.
