Oil trade groups rebut Biden refinery claims and note 'world-leading' capacity

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Executives from two U.S. oil industry trade groups on Wednesday rebutted President Joe Biden’s accusations that refiners were reaping undue profits, denying his claims that the sector is not doing its part to ramp up production and lower energy costs and instead placing blame on his policy agenda.

American Petroleum Institute President Mike Sommers and American Fuel and Petrochemical Manufacturers CEO Chet Thompson noted in a letter that U.S. refiners are currently running at a “world-leading” 94% of capacity.

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“Although the Russian invasion is undoubtedly exacerbating the situation, today’s challenges are largely the result of high crude prices due to 1) a supply/demand imbalance, 2) logistics reshuffling as the world emerges from the pandemic, strong consumer demand, the ban on Russian products, and 3) policy decisions made at the federal and state levels over many years and by successive administrations,” Sommers and Thompson wrote.

API and AFPM included a list of seven “realities” behind the surge in prices. They noted that prices of refined products are ultimately determined on global markets, that U.S. refineries are “operating at or near maximum utilization,” and that roughly “one-third of recent refining capacity loss is due to conversions to renewable fuel production.”

The executives also noted that investing in additional capacity is a long-term decision and is discouraged by Biden’s efforts to move the economy away from fossil fuels, citing his campaign comment that he meant to “end fossil fuel.”

In fact, they added that U.S. refiners are adding new refining capacity “where it makes business sense.”

Current market conditions are complex, they added, noting that, even if refiners could bring more refining capacity online, “the result could be higher demand and higher costs for crude oil. “

This response comes just hours after Biden called on seven large integrated refinery operators, including ExxonMobil, BP, and Shell, to ramp up production of oil and diesel fuel.

And while Russia’s war in Ukraine has certainly played a role in the price hikes, Biden noted that refiner profits have “tripled” as many struggle to afford record-high fuel costs, which on Wednesday climbed to a national average of $5.014 per gallon.

“The crunch that families are facing deserves immediate action,” Biden wrote in a letter to the refiners, adding: “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”

On Wednesday, Biden suggested his administration is prepared to “take action” should oil companies fail to boost production, though he stopped short of detailing what such consequences would entail.

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“I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply,” he said.

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