US meets with refineries on high pump prices; No plan yet – sources

US Energy Secretary Jennifer Granholm has expressed interest in a possible lifting of gasoline rules to combat smog to combat high pump prices and backed away from a plan to ban fuel exports during a wide-ranging meeting with refiners, two industry sources said. Thursday.

With tensions rising between US President Joe Biden and Big Oil, the two sides entered the meeting with a promise to work together in good faith. Industry sources familiar with the talks said they remain far apart on long-term solutions. But the Energy Ministry and sources said talks would continue.

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

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Sources said Granholm has taken a conciliatory tone, acknowledging that there are no viable options in the short term to combat price hikes.

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

Industry members had hoped to persuade the administration not to ban US fuel exports to fight record gas prices. Sources said Granholm has taken that option off the table as a short-term solution.

The White House was already considering lifting summer restrictions on gasoline that would require refineries and mixers to avoid low-cost ingredients like butane to prevent smog. The sources said Granholm told the refiners that the White House would discuss the issue with the US Environmental Protection Agency. It was not immediately clear how much it would cut, but analysts say any change is likely to be minimal.

Gasoline averaged $4.94 a gallon Thursday, according to data from the American Automobile Association, up 34 cents from a month ago, and $1.87 from a year ago.

Refiners have cut capacity during the coronavirus crisis shutdown, but prices have jumped dramatically this year with post-pandemic demand and the global fuel crisis after Western countries imposed sanctions on Russian oil.

ExxonMobil (XOM.N)Chevron (CVX.N) Other giant refiners announced a huge jump in profits at the end of 2021 and the first quarter of this year and flooded shareholders with buybacks and dividends.

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

The White House said refineries have a “patriotic” duty to help supply. Read more

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

diminishing capacity

Refiners say investing in reopening plants carries significant financial risks. The Biden administration took office, pledged to shift the country away from fossil fuels that contribute to climate change, and secured billions of dollars for the electric car industry.

Gretchen Watkins, Shell’s chief US operations officer who attended the meeting, said Granholm acknowledged Shell and other companies “have reduced refining capacity because we are busy converting century-old assets to produce biofuels.”

The Energy Department said meeting participants discussed technical, economic and political obstacles to increasing domestic refining capacity and what companies are doing to keep existing operations safely online. They also talked about measures that could increase preparedness on the East Coast as the country moves deeper into hurricane season in the Atlantic, she said.

On Wednesday, Biden called on Congress to pass a three-month moratorium on the federal gasoline tax. Lawmakers within his party opposed it, saying it might provide a little relief while screwing up a hole in the tax-financed Highway Trust budget. Read more

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

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

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

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