American Petroleum Institute and ExxonMobil Respond to Biden's Threats Against U.S. Oil Companies.
Some background referencing Biden's threats against U.S. oil companies, followed by the letter that the American Petroleum Institute sent to Biden in response.
The ball is now in Biden's court.
/ Updated, with the response from ExxonMobil
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"Joe Biden is calling on seven of the top oil companies to do something to help quell surging gas prices after accusing them of intentionally exacerbating the strain on Americans' pocketbooks after the average price per gallon surpassed $5.00.
The president is sending letters Wednesday to Marathon Petroleum Corp., Valero Energy Corp., ExxonMobil, Phillips 66, Chevron, BP, and Shell to demand action on lowering gas prices at the corporate level and account for the surge.
In a letter to Exxon obtained by Axios, Biden wrote that the difference 'of more than 15% at the pump is the result of the historically high profit margins for refining oil into gasoline, diesel and other refined products.'
'Since the beginning of the year, refiners' margins for refining gasoline and diesel have tripled, and are currently at their highest levels ever recorded,' he added in the letter to Exxon Mobil CEO Darren Woods.
Biden is also threatening to use his 'emergency power' if oil companies do not take action to lower prices for a gallon of gas.
'Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied,' he wrote. 'Already, I have invoked emergency powers to execute the largest Strategic Petroleum Reserve release in history, expand access to E15 (gasoline with 15% ethanol), and authorize the use of the Defense Production Act to provide reliable inputs into energy production.'
'I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply,' he added.
The price per gallon of regular gas hit a national average of $5.00 on Saturday for the first time ever, according to AAA. As of Wednesday morning the average price sits at $5.01, after hitting a new high of $5.02 on Tuesday.
Gas is most expensive in California, where some areas are nearing $7.00 per gallon, while they remain the lowest in Georgia at $4.50 for a regular gallon of gas.
Biden demanded that oil refiners explain the 'disconnect' between the price they pay for oil and the price they are charging Americans at the pump.
'Since the beginning of this year, gasoline prices have increased by more than $1.70 per gallon,' the president lamented.
'Vladimir Putin's war of aggression, and the bipartisan and global effort to counter it, has disrupted the global supply of oil and driven up the global price,' he continued. 'But the sharp rise in gasoline prices is not driven only by rising oil prices, but by an unprecedented disconnect between the price of oil and the price of gas.'
Biden laid out in his letter: 'The last time the price of crude oil was about $120 per barrel, in March, the price of gas at the pump was $4.25 per gallon. Today, gas prices are 75 cents higher, and diesel prices are 90 cents higher.'
The administration has blamed oil price surges on Russia's continued invasion of Ukraine, which started in late February, and on greedy Big Oil companies. ..."
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Here is the letter that American Petroleum Institute wrote to Biden in response:
June 14, 2022
Via Email
The White House
1600 Pennsylvania Avenue, N.W.
Washington DC 20500
Dear Mr. President:
As the world witnesses, the atrocities of Russia’s unprovoked invasion of Ukraine, American leadership has been critical in forming a unified response with our international allies. The U.S. oil and natural gas industry supports your administration’s actions in addressing Russia’s actions and is committed to assisting your efforts in maintaining global stability, security, and peace.
Unfortunately, Russia’s actions and the instability it created has contributed to an already forming global energy crisis. Several factors have led to a significant and sustained supply and demand imbalance in global oil markets. Demand for energy, specifically crude oil, has surged as global economies have rebounded from the early part of the COVID-19 pandemic. In part, supplies have not kept pace due to global underinvestment in recent years driven by geopolitical and market forces, public policies, and investor sentiment.
This combination of factors and events leaves us in the situation we face today. Namely, the most consequential energy crisis since the 1970s. As Americans face soaring energy costs and the world braces for the potential for future supply shortages, this crisis again calls for American leadership. Fortunately, the United States benefits from an abundance of oil and natural gas resources and has developed cutting-edge technologies to be the world’s energy leader.
It is vital for the United States to take action to preserve our leadership position, promote economic growth, and support the American people and help defend our allies. To overcome the obstacles we are facing, it is time for an energy awakening – for the oil and natural gas industry and government to come together to unlock America’s energy resources, encourage investment opportunities, accelerate infrastructure, and strengthen global energy security.
The following 10 in 2022 Plan consists of ten immediate steps we recommend your administration and/or Congress take to help address our current energy challenges by increasing supply and underscoring the connection between energy security and national security:
1. Lift Development Restrictions on Federal Lands and Waters
The Department of the Interior (DOI) should swiftly issue a 5-year program for the Outer Continental Shelf and hold mandated quarterly onshore lease sales with equitable terms. DOI should reinstate canceled sales and valid leases on federal lands and waters.
2. Designate Critical Energy Infrastructure Projects
Congress should authorize critical energy infrastructure projects to support the production, processing, and delivery of energy. These projects would be of such concern to the national interest that they would be entitled to undergo a streamlined review and permitting process not to exceed one year.
3. Fix the NEPA Permitting Process
Your administration should revise the National Environmental Policy Act (NEPA) process by establishing agency uniformity in reviews, limiting reviews to two years, and reducing bureaucratic burdens placed on project proponents in terms of size and scope of application submissions.
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4. Accelerate LNG Exports and Approve Pending LNG Applications
Congress should amend the Natural Gas Act to streamline the Department of Energy (DOE) to a single approval process for all U.S. liquefied natural gas (LNG) projects. DOE should approve pending LNG applications to enable the U.S. to deliver reliable energy to our allies abroad.
5. Unlock Investment and Access to Capital
The Securities and Exchange Commission should reconsider its overly burdensome and ineffective climate disclosure proposal and your administration should ensure open capital markets where access is based upon individual company merit free from artificial constraints based on government-preferred investment allocations.
6. Dismantle Supply Chain Bottlenecks
You should rescind steel tariffs that remain on imports from U.S. allies as steel is a critical component of energy production, transportation, and refining. Your administration should accelerate efforts to relieve port congestion so that equipment necessary for energy development can be delivered and installed.
7. Advance Lower Carbon Energy Tax Provisions
Congress should expand and extend Section 45Q tax credits for carbon capture, utilization, and storage development and create a new tax credit for hydrogen produced from all sources.
8. Protect Competition in the Use of Refining Technologies
Your administration should ensure that future federal agency rulemakings continue to allow U.S. refineries to use the existing critical process technologies to produce the fuels needed for global energy markets.
9. End Permitting Obstruction on Natural Gas Projects
The Federal Energy Regulatory Commission should cease efforts to overstep its permitting authority under the Natural Gas Act and should adhere to traditional considerations of public needs as well as focus on direct impacts arising from the construction and operation of natural gas projects.
10. Advance the Energy Workforce of the Future
Congress and your administration should support the training and education of a diverse workforce through increased funding of work-based learning and advancement of STEM programs to nurture the skills necessary to construct and operate oil, natural gas, and other energy infrastructure.
While members of your administration have recently discussed the need for additional supplies to solve the energy crisis, your administration has restricted oil and natural gas development, canceled energy infrastructure projects, imposed regulatory uncertainty, and proposed new tax increases on American oil and gas producers competing globally. Respectfully, the American people need a different direction to solve this crisis.
API’s 10 in 2022 Plan outlined above offers this new direction. The plan has the potential to lead to an era of collaboration between the government and the private sector to meet our growing energy needs and to provide a measure of relief for the American people. We request the opportunity to work with your administration to help maintain the United States’ essential leadership position in the world.
Sincerely,
Mike Sommers
President and CEO
cc: US Secretary of the Interior Deb Haaland
US Secretary of Commerce Gina Raimondo
US Secretary of Labor Marty Walsh
US Secretary of Transportation Pete Buttigieg
US Secretary of Energy Jennifer Granholm
White House Chief of Staff Ron Klain
US EPA Administrator Michael Regan
White House National Economic Council Director Brian Deese
White House Council on Environmental Quality Chair Brenda Mallory
Securities and Exchange Commission Chair Gary Gensler
Federal Energy Commission Chair Richard Glick
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/ Update
16/06/2022
ExxonMobil today released the following statement in response to a letter from President Biden.
We have been in regular contact with the administration to update the President and his staff on how ExxonMobil has been investing more than any other company to develop U.S. oil and gas supplies. This includes investments in the U.S. of more than $50 billion over the past five years, resulting in an almost 50% increase in our U.S. production of oil during this period.
Globally, we’ve invested double what we’ve earned over the past five years -- $118 billion on new oil and gas supplies compared to net income of $55 billion. This is a reflection of the company’s long-term growth strategy, and our commitment to continuously invest to meet society’s demand for our products.
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.
In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions -- such as waivers of Jones Act provisions and some fuel specifications to increase supplies. 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.
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