U.S. meets with refiners on high pump prices; no plan yet -sources

WASHINGTON, June 23 (Reuters) – U.S. Energy Secretary Jennifer Granholm has expressed interest in a possible lifting of anti-smog rules on gasoline to tackle high prices at the pump and has waived a plan to ban fuel exports at a broad meeting with refiners, two industry sources said. Thursday.

With tensions high between US President Joe Biden and Big Oil, the two sides entered the meeting with a promise to work together in good faith. They have remained far apart on long-term solutions, said industry sources familiar with the talks. But the Department of Energy and the sources said talks would continue.

Biden, a Democrat, has criticized industry CEOs for making huge profits from a fuel shortage exacerbated by Russia’s invasion of Ukraine. Biden met briefly with state officials to talk about increasing wind power on Thursday, but he skipped the meeting with refiners. Read more

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Granholm struck a dovish tone, the sources said, and acknowledged the lack of viable near-term options to combat high prices.

An Energy Department spokesperson said Granholm did not tell the refiners the administration was leaning toward specific actions as a result of the meeting. Granholm “reiterated that (Biden) stands ready to act quickly and decisively, using the tools at his disposal when needed,” the department said.

Industry members had hoped to convince the administration not to ban U.S. fuel exports to combat record gas prices. Granholm all but took the option off the table as a short-term solution, the sources said.

The White House had previously considered lifting summer gasoline restrictions that require refiners and blenders to avoid less expensive components like butane to prevent smog. Granholm told the refiners the White House would discuss the matter with the US Environmental Protection Agency, the sources said. It was not immediately clear by how much this would lower the price of gasoline, but analysts say any change would likely be minimal.

The average gasoline price was $4.94 a gallon Thursday, according to American Automobile Association data, 34 cents higher than a month ago and $1.87 higher than a month ago. a year.

Refiners cut capacity during COVID-19 crisis shutdowns, but prices have soared this year with post-pandemic demand and a global fuel crisis after Western countries sanctioned Russian oil.

Exxon Mobil (XOM.N), Chevron (CVX.N) and other refining giants reported massive profit increases in late 2021 and the first quarter of this year and flooded shareholders with buyouts and dividends.

The White House has targeted the refining industry’s decision to idle about 1 million barrels per day of production capacity since 2020, arguing they should use their windfall profits to restart plants or units and help fill the supply gap that drives up prices.

Refiners have a “patriotic” duty to help supply, the White House has said. Read more

Thursday’s meeting with seven companies included executives from Exxon Mobil, Chevron, Marathon and Phillips 66 (PSX.N).

REDUCED CAPACITY

Refiners say investing in reopening plants carries significant financial risks. The Biden administration came into office pledging to move the country away from fossil fuels that contribute to climate change and secured billions of dollars for the electric vehicle industry.

Gretchen Watkins, president of Shell Plc’s U.S. operations who attended the meeting, said Granholm acknowledged that Shell and other companies “have diminished their refining capacity because we’re busy converting century-old assets to produce biofuels”.

Meeting attendees discussed technical, economic and political barriers to expanding domestic refining capacity and what companies are doing to keep existing operations safely online, the Energy Department said. . They also talked about actions that could improve preparedness on the East Coast as the country sinks into Atlantic hurricane season, he said.

On Wednesday, Biden called on Congress to pass a three-month suspension of the federal gas tax. Lawmakers from his own party have opposed it, saying it may bring little relief while gouging a hole in a Highway Trust Fund budget that taxes fund. Read more

A group of 25 drilling and pipeline industry groups, including the American Petroleum Institute, sent a letter to Biden on Thursday urging him to visit America’s vast energy sources ahead of a July trip to Saudi Arabia, where he should encourage the oil-rich country to increase output.

“American energy solutions are under our feet, and we urge you to reconsider the immense potential of America’s oil and natural gas resources – which are the envy of the world – for the benefit of American families, the American economy and of our national security,” they wrote.

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Reporting by Jarrett Renshaw in Philadelphia and Timothy Gardner and Laura Sanicola in Washington and Gary McWilliams in Houston; Editing by Heather Timmons, Carmel Crimmins, Josie Kao and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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