Biden administration officials and oil industry executives huddled together in Washington on Thursday to discuss possible steps to combat runaway gasoline prices, and while both sides called the talks constructive, no concrete plans for relief emerged.
High prices at the pump are weighing on American consumers – and hurting President Joe Biden’s approval.
En route to the gathering, Energy Secretary Jennifer Granholm said she hoped the meeting would result in refiners increasing gas supplies to lower prices for the summer holiday driving season.
Afterward, the Energy Department said the talks had a “productive focus on analyzing current global supply and refining issues” and pledged “ongoing dialogue” to “alleviate current supply and pricing challenges.”
Similarly, the American Petroleum Institute and American Fuel & Petrochemical Manufacturers called the meeting a “constructive discussion on ways to counter rising energy costs and make global energy markets safer.”
Chevron, Phillips 66 and Shell all issued optimistic statements, with Shell US President Gretchen Watkins praising Granholm for setting a “collaborative tone” by noting that Shell and others had shifted some refining capacity to make biofuels.
However, no practical steps to increase supply immediately have been announced.
White House press secretary Karine Jean-Pierre called the gathering a “first step.”
“We clearly want to find solutions,” said Jean-Pierre at a press conference. “There will be other steps to get there.”
– Uneasy Bonds –
Biden and the oil industry have an uneasy relationship, in part because of White House efforts to limit drilling in some federal areas over environmental concerns and decisions like canceling the Keystone Pipeline project on his first day in office.
The US president has also blasted industry leaders in recent days over skyrocketing profits and their reluctance to boost capital spending.
Industry leaders released a letter to Biden ahead of Thursday’s meeting that alluded to his upcoming trip to Saudi Arabia and urged him to visit U.S. refineries and other industrial sites to understand the potential for “American-made energy solutions.”
But with Biden’s approval ratings falling due to rising inflation, the president has turned to the industry for relief.
– Short-term solutions? –
Gasoline prices are currently at $4.94 a gallon, a little below the all-time high but up more than 60 percent year-on-year.
In a letter to oil giants earlier this month, Biden said high fuel prices were a key factor in the “intense financial pain the American people and their families are enduring.”
He called on ExxonMobil, Chevron and other industry players to “provide concrete, short-term solutions to deal with the crisis.”
In response, Chevron chief executive Mike Wirth vowed to work with administration, but criticized Biden’s comments for “sometimes denigrating the industry” — and joked that Wirth was “mildly sensitive.”
The price hike follows Russia’s invasion of Ukraine, which exacerbated an already tight energy supply situation and pushed crude prices sharply higher.
The price hike also reflects the reduced state of refining capacity after the industry mothballed some plants during the Covid-19 lockdown and failed to reopen them amid uncertain long-term growth prospects with an electric vehicle build-out.
Biden’s policy so far has focused on a huge surge in crude oil from the Strategic Petroleum Reserve.
On Wednesday, the US President proposed a temporary reduction in fuel taxes, a measure that was met with lukewarm reception on Capitol Hill.
For energy specialist Andrew Lebow of consultancy Commodity Research Group, “there is very little that refineries can do right now.”
“If they could produce more, they would certainly assume that the margins are incredible,” he said.
On Wednesday, Granholm acknowledged that building new refineries cannot happen overnight, but said the administration wanted answers about plants that had been shut down.
She also wanted to talk about supply chain issues and wondered if industry could help on that front.
Kevin Book, head of research at Clearview Energy Partners, said there are areas where the government can help, such as facilitating the procurement of truck drivers and sand for fracking.
Adopting a generally constructive tone on regulation could also boost investment, he said.
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