Refineries suggest a different path for Biden administration to boost production
American fossil fuel companies responded on Wednesday to President Joe Biden’s June 14 letter that accused them of profiteering and driving up gas prices during a “time of war.”
Biden’s letter blamed gas prices, which have skyrocketed from $2.53 per gallon when he took office to $5.00 today, on “Putin’s war of aggression” and greedy corporations, ignoring his own efforts to suppress American fossil fuel production. Since taking power in January 2021, the Biden administration has worked relentlessly across multiple agencies to carry out his campaign pledge in which he stated, “I guarantee you we are going to end fossil fuel.”
Biden’s note to energy executives put the blame for today’s surging gas prices on refineries and the “high profit margins for refining oil into gasoline,” stating that when crude oil was $120 per barrel in March, similar to today’s prices, “the price of gas at the pump was $4.25 per gallon. Today, gas prices are 75 cents higher.” The difference, he claimed, was due to refiners’ profit margins, which have tripled since then. Simultaneously, White House Spokesperson Karine Jean-Pierre slammed U.S. oil companies for failing to do their “patriotic duty.”
Responding to Biden’s letter, the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers stated (pdf) that U.S. refineries are currently operating at 94 percent capacity, among the highest utilization rates in the world, and that prices for oil products are set on world markets based on global supply and demand, not by American companies. According to the Energy Information Administration, refining costs made up 14 percent of the total price of gasoline in 2021. The remainder includes 54 percent for crude oil, 16 percent for distribution, and 16 percent for taxes. Escalating prices have driven up the share of crude oil to 60 percent of the total this month.