by John Kemp, Reuters Senior Markets Analyst at ZeroHedge
President Joe Biden has written to major oil companies to complain about the high refining margins for gasoline and diesel and demanded an explanation for refinery closures since 2020. The president’s letter, dated June 14, should be seen mostly as a political exercise to deflect responsibility for high fuel prices and accelerating inflation (“Biden warns big oil over gasoline output”, Axios, June 15).
He blamed historically high profit margins made by refiners for causing an “unprecedented disconnect” between the international price of crude oil and the retail price of gasoline.
“At a time of war,” the president wrote, record margins “are not acceptable” and demanded companies increase the supply of gasoline and other refined fuels immediately.
GLOBAL FACTORS
Biden acknowledged Russia’s invasion of Ukraine has been a primary driver of higher oil and therefore gasoline prices. Russia’s President Vladimir Putin was name-checked four times to ensure readers knew who to blame. But the U.S. president also complained that the lack of domestic refinery capacity and high margins are blunting the impact of other actions the administration has taken to stabilise fuel prices for consumers.
He has already ordered an unprecedentedly large release of crude oil from the strategic petroleum reserve and relaxed gasoline blending regulations in an effort to hold down pump prices. The shortage of refinery capacity is a global problem, with more than 3 million barrels per day (bpd) going offline since the onset of the pandemic.
But the president noted more than 800,000 bpd of capacity had closed in the United States since 2020 and demanded an explanation…
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