On Thursday, Energy Sec. Jennifer Granholm will hold a meeting with leaders in the petroleum refining sector as prices at the pump recently hit a record high of $5 per gallon.
The meeting comes on the heels of President’s Biden letter to energy companies demanding they ramp up refining capacity that, as Energy In Depth recently noted, was filled with blunders including a failure to acknowledge that refineries are already operating at 95 percent. Further, there was no mention that increasing capacity requires long-term investments, which, as even the media is starting to call out, are being deterred by the mixed messages coming from the administration.
The letter has received bipartisan criticism, with Rep. Henry Cuellar (D-Tex.) saying there should be more support for America’s energy industry:
“The Biden administrations recent letter to refiners does not resolve the issue at hand. What we need is dialogue. We need real solutions. In fact, the Oil and Gas industry employs over 200,000 hardworking Americans, contributes millions to our economy, and (when championed) keeps the United States energy independent—all of which is vital for our national security.”
And Sen. Tom Cotton (R-Ark.) tweeted that the mixed messages from the Biden administration are just making the situation worse:
Biden promised to end drilling & enacted policies to restrict oil.
But now he mails a letter to oil firms complaining they’re not drilling enough?
This isn’t just incoherence—it’s chaos.
— Tom Cotton (@TomCottonAR) June 15, 2022
Ahead of the meeting, industry leaders are making it clear that their businesses are doing everything they can ramp up the supply of both oil and gasoline to help lower the price at the pump and that the Biden administration needs to change its rhetoric and policy actions to instill more confidence in the market.
Chevron CEO Mike Wirth published a letter stating his company would attend the Thursday meeting with Granholm, but had sharp words for the president:
“Chevron and its 37,000 employees work every day to help provide the world with the energy it demands and to lift up the lives of billions of people who rely on these supplies. Notwithstanding these efforts, your Administration has largely sought to criticize, and at times vilify, our industry. These actions are not beneficial to meeting the challenges we face and are not what the American people deserve.”
Likewise, ExxonMobil highlighted its own efforts to increase supply but said that clear policies from Washington are critically important:
“Specific to refining capacity in the U.S., we’ve been investing through the downturn to increase refining capacity to process U.S. light crude by about 250,000 barrels per day – the equivalent of adding a new medium-sized refinery. We kept investing even during the pandemic, when we lost more than $20 billion and had to borrow more than $30 billion to maintain investment to increase capacity to be ready for post-pandemic demand.
“Longer term, 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.”
Shell noted the near peak of refining capacity and its efforts to deliver energy to consumers:
“Shell said in a statement to Upstream it is producing at full capacity in the US and is looking into delivering more energy products to customers in the US and abroad.
“‘Those efforts include accelerating new and existing production of crude oil in the Gulf of Mexico and repurposing an idled refinery in Louisiana (Convent) that will produce lower-carbon fuels and products.’”
Phillips 66 voiced the same concerns around utilization rates and capacity, noting that it requires long-term investments.
“In a written statement sent to Upstream, Phillips 66 said: ‘We look forward to working with the Biden administration on issues around energy security. We do, however, want to underscore that US refineries are running at high utilization rates. Further, refinery capacity expansion is a long-term proposition, given permitting, engineering design, capital cost estimates and equipment procurement.’”
The leaders of American Fuel and Petrochemicals Manufacturers and the American Petroleum Institute sent a letter to President Biden highlighting energy workers producing energy throughout the pandemic and the need for a strong refining sector:
“Our industry is dedicated to providing affordable, reliable, and sustainable fuels and other petroleum products for Americans and our global allies, as we have done for decades, including throughout the COVID pandemic when many of our companies experienced financial losses…
“With a global energy crunch underway, much focus has been placed on crude oil supply and demand. Yet crude oil has no utilitarian value until it runs through a refinery and gets processed into fuels like wholesale gasoline, diesel and jet fuel. Because of this, it’s not an overstatement to say that energy security requires a strong refining sector.”
This post appeared first on Energy In Depth.