The oil and gas industry is mad as hell and they’re not gonna take it anymore.
Several energy companies slapped back at President Joe Biden on Wednesday, after Biden on Tuesday wrote a letter to the nation’s energy companies accusing them of gouging Americans at the pump for higher profits.
(Say, wasn’t this supposed to be “Putin’s price hike”?)
Several of the energy companies fired off responses in return, pointing out that refinery utilization rates are high and blaming the policies of Biden and his administration that are keeping the thumb on oil and gas output.
“We’re going to make sure everyone knows Exxon’s profits. Exxon made more money than God last year”
In 2020 Exxon lost $22.4 billion Federal government made $25.8 billion on gas taxes (imagine how much Biden & Co raking in right now). pic.twitter.com/3ak7oMPhTo
— Charles V Payne (@cvpayne) June 10, 2022
It’s Putin’s Fault!
No letter, speech, or any form of communication on the subject of gas prices would be complete without blaming Russian President Vladimir Putin. And that’s exactly what Joe Biden did.
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A portion of the letter reads:
“There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing. But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”
Biden thought the best way to get oil companies to see things his way was to get tough:
“Your companies and others have an opportunity to take immediate actions to increase the supply of gasoline, diesel and other refined product you are producing. My administration is prepared to use all reasonable and appropriate Federal 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.”
The more the White House antagonizes the American oil industry with cheap attacks (like the soundbite ‘Exxon makes more money than God…’ earlier today) the worse it would look when President Biden travels to Saudi Arabia to ask for more oil | #OOTT
— Javier Blas (@JavierBlas) June 10, 2022
America’s Oil And Gas Companies Respond
It did not take long for energy companies to politely explain to Biden how investments and production work in the real world.
As Reuters points out, the industry is already running at near-capacity for oil refining.
In a response to Biden, The American Petroleum Institute (API) and American Fuel & Petrochemical Manufacturers (AFPM) stated:
“Refiners do not make multi-billion-dollar investments based on short-term returns. They look at long-term supply and demand fundamentals and make investments as appropriate. To that end, following on your campaign promise to ‘end fossil fuel,’ consider just some of the policy and investment signals being sent by various federal agencies and allied state governments to the market about our refining industry. The timing and reasons for shutdowns of several refineries, including the Philadelphia Energy Solutions and Shell Convent refineries, were primarily due to lack of buyers willing to continue operating the facilities as petroleum refineries given growing rhetoric about the long-term viability of the industry.”
It’s a fair point. Why would any company make multi-billion-dollar investments in a country where the political leadership has vowed to upend the industry?
As Bloomberg points out, what economists call “regime uncertainty” is certainly at work – it would be counterproductive and irresponsible for companies to spend billions to make a product that might disappear in the near future:
“Across the sector, nationwide refining capacity declined by about 5% as aging plants were converted to renewable-fuel complexes, or mothballed because it would cost too much to modernize them.
For example, LyondellBasell Industries NV plans to shutter its century-old plant along the Houston Ship Channel after a years-long, unsuccessful search for a buyer.”
And while profits are indeed up, that doesn’t mean the money can or should be put back into a possibly defunct product:
Despite the waterfall of cash, refiners almost certainly will never build another US plant, according to Chevron CEO Mike Wirth. The cost, regulatory challenges and long-term risk of sweeping policy changes would doom any such project, he said.
“You’re looking at committing capital 10 years out, that will need decades to offer a return for shareholders, in a policy environment where governments around the world are saying: we don’t want these products,” Wirth told Bloomberg Television. “We’re receiving mixed signals in these policy discussions.”
ExxonMobil also got in on the act, telling the Daily Caller News Foundation:
“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. 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.”
The best and most direct response to Joe Biden and his accusations may have come from Chevron spokesperson Bill Turenne, who also told the Daily Caller News Foundation:
“Chevron is committed to the supply of affordable, reliable, ever-cleaner energy in the United States and across the globe. We understand the significant concerns around higher fuel prices currently faced by consumers around the country, and the world. We share these concerns, and expect the Administration’s approach to energy policy will start to better reflect the importance of addressing them. Unfortunately, what we have seen since January 2021 are policies that send a message that the Administration aims to impose obstacles to our industry delivering energy resources the world needs.”
For its part, the Biden administration seems to have trouble sticking with one boogeyman. One day it’s “Putin’s price hike,” and the next day it’s Exxon and their profits’ fault.
President Biden calls out ExxonMobil:
“Exxon made more money than God this year … Exxon, start investing, start paying your taxes.” pic.twitter.com/VXGpvIaDHB
— The Recount (@therecount) June 10, 2022
High Gas Prices Has Happened Before
API and AFPM were quick to point out that future bans on gas-powered vehicles in California – encouraged by the Biden administration – do not help.
In the meantime, Joe Biden will travel to the Middle East next month where he will no doubt try to persuade the Saudi government to come to the table and up production as well. If that doesn’t work, plan B is probably just to beg for oil.
Leftist ideas like phasing out fossil fuels have been something they have fantasized about for quite a while. In fact, the last time gas prices topped $4 a gallon was in 2008.
Congress decided to grill oil industry executives back then about soaring gas prices. But it was Rep. Maxine Waters (D-CA) who let the cat out of the bag in a big way as to what Democrats might have really been up to, and may still be today.
This video has turned out to be quite prophetic. Here is Maxine Waters saying the quiet part out loud:
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