‘Constructive’ talk but no deal as Granholm meets oil execs

Biden wants the industry to boost capacity; oil executives say new policies discourage investment

Secretary of Energy Jennifer M. Granholm at Wednesday's daily White House press briefing. (Drew Angerer/Getty Images)
Secretary of Energy Jennifer M. Granholm at Wednesday's daily White House press briefing. (Drew Angerer/Getty Images)
Posted June 23, 2022 at 5:22pm

A meeting on Thursday of oil company executives and Energy Secretary Jennifer M. Granholm concerning high consumer gas prices and refining capacity was “constructive,” even as it failed to produce a policy to address prices at the pump, industry leaders said.

The White House called for the meeting with executives from Exxon Mobil, Chevron, BP and Phillips 66, as it faces political pressure over gas prices that average nationally at $4.94 per gallon, according to AAA, nearly $1.88 higher than the average this time last year.

On Wednesday, President Joe Biden called for companies to increase refining capacity as part of a wider push to reduce the price consumers pay at the pump. He also called on Congress to pass legislation waiving the gas tax for 90 days and asked states to do the same.

Following the meeting at the Energy Department, the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers released a joint statement that said there had been a “constructive discussion.”

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“While these challenges and their causes are complex — from Russia’s war in Ukraine to market imbalances leftover from COVID — productive outcomes today should send a positive signal to the market that the U.S. is committed to long-term investment in a strong U.S. refining industry and aligning policies to reflect that commitment,” the groups’ statement said.

'First step'

White House Press Secretary Karine Jean-Pierre said the meeting was a “first step” and that the Energy Department will continue conversations with the companies.

“The meeting was a productive dialogue focused on creating an opportunity with industry to work with government to help deliver needed relief to American consumers,” Jean-Pierre said. “The secretary made clear that the administration believes it imperative that companies increase supply of gas, and she reiterated that the president is prepared to act quickly and decisively, using the tools available to him as appropriate.”

Chevron CEO Mike Wirth similarly said the meeting was “a constructive conversation about addressing both near-term issues and the longer-term stability of energy markets.”

The comment came after Wirth sent a letter to Biden on Tuesday that said bringing down prices would require a change in approach and that the White House was at times vilifying the oil industry. In response, Biden said Wirth was “mildly sensitive. I didn't know they’d get their feelings hurt that quickly."

Refining capacity reached a record high prior to the pandemic but has since declined by 5.4 percent to an eight-year low, the Energy Information Agency said in a report released Tuesday.  

The White House has not said publicly how much additional capacity it wants the oil companies to bring on-line. The president said Wednesday that he hoped a combination of federal and state fuel-tax holidays and additional production by fuel refiners could lower pump prices by about $1 per gallon.

The API and AFPM said U.S. refineries are operating at 94 percent capacity and that facilities have delayed maintenance projects and upgrades in order to meet demand.

Climate signals

However, the groups said in a June 15 letter to Biden that short-term returns do not affect companies' investment plans and that steps the Biden administration has taken to regulate the industry as part of the push to address climate change have sent signals to disincentivize the investments.

Instead, many industry groups have called on the administration to increase domestic production to meet demand. On Thursday, the API and 28 other energy organizations encouraged Biden to consider domestic sources ahead of his July trip to Saudi Arabia, where he is expected to continue his call for OPEC+ nations to increase production.

“Your trip to Saudi Arabia next month is important on a number of those fronts, including boosting global energy supply,” they wrote in a letter to Biden. “Yet American-made energy solutions are beneath our feet, and we urge you to reconsider the immense potential of U.S. oil and natural gas resources — that are the envy of the world — to benefit American families, the U.S. economy and our national security.”

Niels Lesniewski contributed to this report.