Oil companies blast Biden over threat of executive action on refinery output

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The oil and gas industry is crazy as hell and they won’t take it anymore.

Several energy companies slapped President Joe Biden on Wednesday, after Biden wrote a letter to energy companies around the country on Tuesday accusing them of abusing Americans at the pumps for higher profits.

(Say, wasn’t that supposed to be “Putin’s price hike”?)

Several of the energy companies responded back, pointing out that refinery utilization rates are high and blaming the policies of Biden and his administration that keep the thumb on oil and gas production.

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It’s Putin’s fault!

No letter, speech or form of communication about gas prices would be complete without blaming Russian President Vladimir Putin. And that’s exactly what Joe Biden did.

Part of the letter reads as follows:

“There is no doubt that Vladimir Putin is primarily responsible for the intense financial pain that the American people and their families are experiencing. But amid a war that has driven gasoline prices more than $1.70 a gallon, historically high refinery profit margins are compounding that pain.

Biden thought the best way to get oil companies to see things his way was to get tough:

“Your businesses and others have the opportunity to take immediate action to increase the supply of the gasoline, diesel and other refined products you produce. My administration stands ready to use all reasonable and appropriate tools of the federal government and emergency authorities to increase refinery capacity and production in the near term, and to ensure that every region of this country is adequately supplied.

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US oil and gas companies react

It didn’t take long for energy companies to politely explain to Biden how investment and production work in the real world.

As Reuters points out, the industry is already operating at near capacity for oil refining.

In a response to Biden, the American Petroleum Institute (API) and American Fuel & Petrochemical Manufacturers (AFPM) said:

“Refiners don’t make multi-billion dollar investments based on short-term returns. They look at the fundamentals of long-term supply and demand and make the appropriate investments. To that end, following your campaign promise to “end fossil fuels,” consider some of the policy and investment signals sent out by various market-allied federal agencies and state governments regarding our refining industry. The timing and reasons for the closures of several refineries, including the Philadelphia Energy Solutions and Shell Convent refineries, were primarily due to a lack of willing buyers to continue operating the facilities as oil refineries, given the rhetoric on the long-term viability of the industry.

That’s a fair point. Why would a company make multi-billion dollar investments in a country where political leaders have vowed to disrupt the industry?

As Bloomberg points out, what economists call “regime uncertainty” is certainly at work – it would be counterproductive and irresponsible for companies to spend billions to make a product that could disappear in the near future:

“Industry-wide, national refining capacity has shrunk by about 5% as aging plants have been converted to renewable fuel complexes, or mothballed because it would cost too much. to modernize them.

For example, LyondellBasell Industries NV plans to close its century-old factory along the Houston Ship Channel after years of searching for a buyer.

And while profits are indeed up, that doesn’t mean the money can or should be reinvested in an eventual extinct product:

Despite the cascade of cash, refiners will almost never build another plant in the United States, according to Chevron CEO Mike Wirth. The cost, regulatory challenges and long-term risk of sweeping policy changes would doom such a project, he said.

“You’re looking at committing capital 10 years from now, it’s going to take decades to deliver a return to shareholders, in a political environment where governments around the world are saying, we don’t want these products,” Wirth told Bloomberg Television. . “We are getting mixed signals in these policy discussions.”

ExxonMobil also got in on the act, telling the Daily Caller News Foundation:

“Specific to US refining capacity, we invested during the recession to increase refining capacity to process US light crude by approximately 250,000 barrels per day – the equivalent of adding a new medium-sized refinery. In the longer term, the government can promote investment through a clear and consistent policy that supports resource development in the United States, such as regular and predictable lease sales, as well as simplified regulatory approval and support for infrastructure such as pipelines.

Perhaps the best and most direct response to Joe Biden and his accusations came from Chevron spokesman Bill Turenne, who also told the Daily Caller News Foundation:

“Chevron is committed to providing affordable, reliable, and ever cleaner energy in the United States and around the world. We understand the significant concerns about rising fuel prices that consumers across the country and around the world are currently facing. We share these concerns and hope that the administration’s approach to energy policy will begin to better reflect the importance of addressing them. Unfortunately, what we have seen since January 2021 are policies that send the message that the administration aims to impose barriers on our industry providing the energy resources the world needs.

For its part, the Biden administration seems to have a hard time sticking with a boogeyman. One day it’s “Putin’s price hike”, and the next it’s the fault of Exxon and its profits.

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Look:

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High gas prices have already arrived

API and AFPM were quick to point out that future bans on gasoline vehicles in California — encouraged by the Biden administration — are not helping.

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In the meantime, Joe Biden will be heading to the Middle East next month where he will no doubt try to persuade the Saudi government to come to the table and ramp up production as well. If that doesn’t work, plan B is probably to beg for oil.

Left-wing ideas like phasing out fossil fuels are something they’ve been fantasizing about for some time. In fact, the last time gasoline prices topped $4 a gallon was in 2008.

Congress decided to grill the leaders of the oil industry at the time on soaring gasoline prices. But it was Rep. Maxine Waters (D-CA) who let the spade out in large part as to what Democrats really could have done, and still can do today.

This video turned out to be quite prophetic. Here’s Maxine Waters saying the quiet part out loud:

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