Soaring gas prices: refiners without a miracle solution

The Biden administration, after accusing refiners of reaping juicy profits on the backs of motorists, adopted a more conciliatory tone on Thursday, asking industry leaders to boost production to drive down gasoline without drawing for the moment of concrete solutions.

Soaring gas prices: refiners without a miracle solution

The Biden administration, after accusing refiners of reaping juicy profits on the backs of motorists, adopted a more conciliatory tone on Thursday, asking industry leaders to boost production to drive down gasoline without drawing for the moment of concrete solutions.

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Soaring prices at the pump, a symbol of the general rise in prices, weighs down the popularity of the Democratic president, who has regularly criticized the oil giants for getting rich without making efforts to solve the problem.

Energy Minister Jennifer Granholm “made it clear [to representatives of seven major refiners in the United States] that the administration believes it is imperative that companies increase production,” according to a report by the meeting broadcast by its services.

They discussed various solutions, including better preparing refineries on the east coast for hurricane season.

However, no concrete measures have been announced.

It was “a first step,” commented White House spokeswoman Karine Jean-Pierre during a briefing. “Obviously we want to get to solutions and there are going to be multiple steps to get there.”

Asked about the idea of ​​a possible moratorium on the export of refined products produced in the United States, which was circulating in the run-up to the meeting, "the decision has not been taken", indicated the spokeswoman. .

But the discussion as a whole was “constructive”, estimated in a press release the two major organizations representing the sector, API and AFPM.

The minister adopted a "collaborative tone from the start, recognizing that the oil market is by nature global and that certain companies, including Shell, have reduced their refining capacity" to be able to produce more biofuel, added the boss of Shell. USA, Gretchen Watkins.

Philipps 66 CEO Greg Garland hailed "a great start" while his Chevron counterpart Mike Wirth spoke of "constructive conversation".

The latter had criticized the president on Tuesday for “vilifying” the sector. A criticism then swept away by Joe Biden, who found him “slightly touchy”.

Incredible margins

The US president, who took part in a meeting on wind energy on Thursday, but not the one with the oil companies, had written last week to ExxonMobil, Chevron, Philips 66, BP, Marathon, Valero and Shell to call on them to take "immediate" measures.

Making “historically high” margins by charging Americans is “not acceptable”, he then claimed.

The oil sector had counter-attacked, retorting in particular that American refineries are already operating at 94% of their capacity.

Before the meeting on Thursday, nearly 30 organizations in the sector also invited Joe Biden to come and visit wells, refineries and pipelines in the United States before going to the Middle East in July, where he should try to convince the Saudis to pump more.

Solutions "are beneath our feet, and we urge you to reconsider the immense potential of America's oil and gas resources," they wrote in a letter.

Industry experts weren’t really expecting big breakthroughs.

"If refiners could produce more now, they would because of the incredible margins they can make," said Andrew Lebow of Commodity Research Group.

Perhaps production will increase a little in the coming weeks once some operational issues are resolved, he said. Prices will come back down a little, but will remain at a high level, he predicts.

Oil prices were boosted by a strong rebound in demand after the COVID-19 pandemic and then by the sanctions imposed on Russia, a major crude producer, after the invasion of Ukraine.

The gallon of gasoline in the United States rose for the first time in early June above the symbolic threshold of 5 dollars per gallon. It has come down a bit since then, but remains far from the 3 dollars of a year ago.

To drive down prices at the pump, Joe Biden on Wednesday asked Congress to temporarily suspend the 18-cent federal gas tax this summer, a request that, however, has drawn skepticism from many experts that the move would only increase demand.

Even limited, this measure would bring “a little breather” to motorists, assured the spokesperson for the White House on Thursday.

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