Just When You Thought Biden Couldn’t Get Any Dumber… Demands Oil Companies Increase Production (2022)

Guest “Bring it on Brandon!” by David Middleton

Published June 15
Biden threatens oil companies with ’emergency powers’ if they don’t boost supply amid inflation spike
Biden says oil companies are earning ‘historically high’ profits

Biden’s statement blames oil companies for running “historically high profit margins” even as Americans experience surging gas prices. Biden has recently faced criticism fora lack of executive actionaimed at curbing inflation.

“There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden wrote. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”

“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,” he continued. “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.”

[…]

Fox News

Everything this idiot has done since occupying the White House has made it more difficult for oil companies to explore for oil & gas, lease acreage, drill wells and produce, transport and refine petroleum products. And he has the temerity to demand an increase in production?

Rather than writing flatulent letters, maybe he could have checked with the Energy Information Administration (EIA).

JUNE 10, 2022
EIA expects high refinery margins to contribute to increasing fuel production this summer

In our June 2022Short-Term Energy Outlook(STEO), we forecast that U.S.refinery utilizationwill be relatively high this summer in response to strong wholesale prices for petroleum products, such as diesel and gasoline, which have increased more than the price of the crude oil used to make them.

The price difference between the price of crude oil and the wholesale price of a refined petroleum product reflects the value of refining crude oil. This difference, known as the crack spread, can indicate refining margins and profitability. Crack spreads for both diesel and gasoline increased in the first several months of 2022.

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Gasoline and diesel prices and crack spreads are well above historical averages in response to several factors including:

Low inventories for both petroleum products in the United States and globally

Fuel demand increases to near pre-pandemic levels

Relatively low refinery production of both fuels compared with pre-pandemic levels

Reduced petroleum product exports from Russia

In response to these high prices, we expect that refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain. We expect refinery utilization to average 96% in June, 94% in July, and 96% in August.

We estimate U.S. refinery inputs will average 16.7 million b/d during the second and third quarters of 2022. This average is lower than the 2019 refinery inputs average of 17.3 million b/d despite high utilization rates because of reductions in refinery capacity since early 2020.U.S. refinery capacityhas fallen by almost 1.0 million b/d since early 2020 because several refineries were closed orconverted.

We expect wholesale prices for gasoline and diesel will begin decreasing in the third quarter of 2022, as refinery production increases. Despite our forecast price decline, we expect that wholesale fuel prices will remain well above previous years through the summer, based on higher crude oil prices as well as the ongoing impact of low global inventories. Low international inventories are likely to face additional tightness in response to the recently announced European ban on Russia’s energy imports.

Principal contributors:Kevin Hack

EIA
Just When You Thought Biden Couldn’t Get Any Dumber… Demands Oil Companies Increase Production (1)

Back during the Shamdemic, the demand for oil and refined products collapsed. This caused prices to collapse, which caused a deep reduction in production. It also lead to the closure of 6 refineries.

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The number of operable refineries in the United States (excluding U.S. territories), which includes both idle and operating refineries was 129 at the beginning of 2021, down from 135 at the beginning of 2020.

In 2019, the 335,000 b/cd Philadelphia Energy Solutions (PES) refinery in Philadelphia, Pennsylvania, experienced a majorrefinery incidentthat led to the refinery’s closure. Because the decision to permanently close the facility was still pending as of January 1, 2020, the facility was listed as idle in the 2020Refinery Capacity Report. As of January 1, 2021, the refinery is considered closed and is not included in the 2021 report.

The additionalrefinery closuresin the 2021Refinery Capacity Reportlargely reflect the impact of COVID-19 on the U.S. refining sector (Figure 2). In 2020, the pandemic contributed to asubstantial decreasein demand for motor fuels and refined petroleum products, which put downward pressure on refinery margins and made market conditionsmore challengingfor refinery operators. Challenging market conditions, increasing market interest in renewable diesel production, and pre-existing plans to scale down or reconfigure petroleum refineries all contributed to the closing of a handful of refineries in 2020. We removed the following refineries from total U.S. operable capacity following their announced closures:

The Western Refining refinery in Gallup, New Mexico: 27,000 b/cd

The Tesoro (Marathon) refinery in Martinez, California: 161,000 b/cd

The Dakota Prairie refinery in Dickinson, North Dakota: 19,000 b/cd

The HollyFrontier refinery in Cheyenne, Wyoming: 48,000 b/cd

The Shell refinery in Convent, Louisiana: 211,146 b/cd

EIA

Several refineries were also converted to “renewable” diesel production:

Renewable dieselhas been increasingly used to meetCalifornia’s Low Carbon Fuel Standard(LCFS),Oregon’s Clean Fuels Program(CFP), and EPA’s RFS.Blender tax creditsand government subsidies related to California’s LCFS and, to a lesser degree, Oregon’s CFP have encouraged several former petroleum refineries—such asMarathon’s Martinez, California refineryandPhillips 66’s Rodeo Renewed projectin San Francisco, California—to convert their refineries into renewable diesel facilities. These projects, in addition to several others,would nearly triplethe current 77,000 barrels per day (b/d) capacity of renewable diesel production by the end of 2023. According to data collected from various trade press sources, the United States will have 67,000 b/d of new renewable diesel capacity online by the end of 2022 and another 72,000 by the end of 2023. These estimates are based on projects that are currently under construction. Construction has not yet begun on some projects that also could come online during this time period, although we assume for our forecasts that these projects will not come online before 2024.

EIA

No amount of Brandon-blathering will bring those closed refineries back on line. There hasn’t been a new crude oil refinery built in the US since 1977. However, the EIA forecasts that the high crack spread will cause refinery utilization rate to climb from the current ~91% to ~96% by this summer, resulting in the crack spread dropping back to roughly where it was before the Shamdemic.

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Just When You Thought Biden Couldn’t Get Any Dumber… Demands Oil Companies Increase Production (2)

Unfortunately for Brandon, this will probably not happen before November.

Just When You Thought Biden Couldn’t Get Any Dumber… Demands Oil Companies Increase Production (3)

This just in… ExxonMobil fires back (H/T CTM)

ExxonMobil statement regarding President Biden Letter to Oil Industry

June 15, 2022 02:46 PM Eastern Daylight Time

IRVING, Texas–(BUSINESS WIRE)–ExxonMobil today released the following statement in response to a letter from President Biden.

We have been in regular contact with the administration to update the President and his staff on how ExxonMobil has been investing more than any other company to develop U.S. oil and gas supplies. This includes investments in the U.S. of more than $50 billion over the past five years, resulting in an almost 50% increase in our U.S. production of oil during this period.

Globally, we’ve invested double what we’ve earned over the past five years — $118 billion on new oil and gas supplies compared to net income of $55 billion. This is a reflection of the company’s long-term growth strategy, and our commitment to continuously invest to meet society’s demand for our products.

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. We kept investing even during the pandemic, when we lost more than $20 billion and had to borrow more than $30 billion to maintain investment to increase capacity to be ready for post-pandemic demand.

In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions — such as waivers of Jones Act provisions and some fuel specifications to increase supplies. 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.

About ExxonMobil

(Video) This Week in Refi - 8/19/2022 with MILK MONEY

ExxonMobil, one of the largest publicly traded international energy and petrochemical companies, creates solutions that improve quality of life and meet society’s evolving needs.

The corporation’s primary businesses – Upstream, Product Solutions and Low Carbon Solutions – provide products that enable modern life, including energy, chemicals, lubricants, and lower-emissions technologies. ExxonMobil holds an industry-leading portfolio of resources, and is one of the largest integrated fuels, lubricants and chemical companies in the world. To learn more, visitexxonmobil.comand theEnergy Factor.

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Just When You Thought Biden Couldn’t Get Any Dumber… Demands Oil Companies Increase Production (4)

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FAQs

Why are US oil companies not producing more oil? ›

The biggest reason oil production isn't increasing is that U.S. energy companies and Wall Street investors are not sure that prices will stay high long enough for them to make a profit from drilling lots of new wells.

Can the US increase oil production? ›

The U.S. Energy Information Administration (EIA) forecasts that U.S. crude oil production will average 11.9 million barrels per day this year and 12.8 million barrels per day in 2023, which would surpass the record average production of 12.3 million barrels per day set in 2019.

Why US oil companies are not drilling? ›

As to why they weren't drilling more, oil executives blamed Wall Street. Nearly 60% cited "investor pressure to maintain capital discipline" as the primary reason oil companies weren't drilling more despite skyrocketing prices, according to the Dallas Fed survey.

Why did US oil production drop? ›

In January 2020, U.S. crude oil production reached a peak of 12.8 million b/d. In March 2020, crude oil prices decreased because of the sudden drop in petroleum demand that resulted from the global response to the coronavirus (COVID-19) pandemic.

Did Biden cancel oil leases? ›

The Biden administration has come under scrutiny for canceling three oil and gas lease sales — including one off the coast of Alaska — that otherwise might have led to additional drilling during a time when gas prices have hit historical highs.

How long would the U.S. oil reserves last? ›

Oil Reserves in the United States

The United States has proven reserves equivalent to 4.9 times its annual consumption. This means that, without imports, there would be about 5 years of oil left (at current consumption levels and excluding unproven reserves).

Who has the most oil in the world? ›

possible and undiscovered), the United States is at the top of the list with 264 billion barrels of recoverable oil reserves, followed by Russia with 256 billion, Saudi Arabia with 212 billion, Canada with 167 billion, Iran with 143 billion, and Brazil with 120 billion (Table 1).

Where does the US get most of its oil from? ›

In 2021, Canada was the source of 51% of U.S. gross total petroleum imports and 62% of gross crude oil imports.
  • The top five sources of U.S. total petroleum (including crude oil) imports by percentage share of total petroleum imports in 2021 were:
  • Canada51%
  • Mexico8%
  • Russia8%
  • Saudi Arabia5%
  • Colombia2%
Apr 21, 2022

Why is Alaska oil production down? ›

The problem is that crude oil production declined in 2020 and 2021 due to the pandemic. Now that the economy is rebounding, with people returning to work and hitting the road, demand is outstripping supply.

Did the US decrease oil production? ›

In the months leading up to the Covid-19 pandemic, U.S. oil production hit an all-time high of just below 13 million barrels per day (BPD). As the pandemic unfolded, demand collapsed, and production followed. By May 2020, oil production had dropped by more than 3 million BPD to 9.7 million BPD.

Is the US producing more oil in 2022? ›

U.S. Oil Production Hits New 2022 Peak, but More Runway Ahead for Growth. Domestic crude output reached a new high for the year as producers continue to gradually ramp up to meet summer demand, the U.S. Energy Information Administration (EIA) reported Wednesday.

Are oil companies making record profits? ›

Exxon alone reported a profit of $17.9 billion – the highest quarterly profit reported by any oil company in history – while Chevron reported $11.6 billion, Shell reported $11.47 billion, and BP reported $8.45 billion.

What percent of oil production is on federal land? ›

The Truth: Oil production from federal lands and waters provides approximately 24% of total U.S. oil production.

Does the US have enough oil for 400 years? ›

No, there is not enough recoverable crude oil in the U.S. to supply the country for 400 years.

How long will oil last in the world? ›

There are 1.65 trillion barrels of proven oil reserves in the world as of 2016. The world has proven reserves equivalent to 46.6 times its annual consumption levels. This means it has about 47 years of oil left (at current consumption levels and excluding unproven reserves).

What will happen when oil runs out? ›

Energy. A sudden loss of oil supplies would make it impossible to meet world energy needs. Countries have very varying stocks of natural gas which they could tap, and Johansen says such resources would be quickly depleted.

Is the US producing less oil? ›

The most recent data available from the Energy Information Administration (EIA) shows current U.S. oil production at ~11.6 million BPD — still 1.4 million BPD short of pre-pandemic production. This shortfall is a major factor that led to the run-up of oil and gasoline prices over the past year.

Why is Alaska oil production down? ›

The problem is that crude oil production declined in 2020 and 2021 due to the pandemic. Now that the economy is rebounding, with people returning to work and hitting the road, demand is outstripping supply.

Why is there an oil shortage? ›

Refining capacity in the U.S. is about a million barrels a day below what it was prior to the pandemic. That's left the country unable to meet its fuel needs as more people are commuting, traveling and driving as they emerge from the throes of the pandemic.

Where does the majority of US oil come from? ›

Petroleum imports from Canada increased significantly since the 1990s, and Canada is now the largest single source of U.S. total petroleum and crude oil imports. In 2021, Canada was the source of 51% of U.S. gross total petroleum imports and 62% of gross crude oil imports.

Can the US refine its own oil? ›

The United States has adequate refinery capacity to process its current and projected crude production, however the free world oversupply of refining capacity will persist through the few remaining years of increasing world crude oil production and thereafter.

Who is the largest oil producer in the world? ›

United States

Who has the most oil in the world? ›

possible and undiscovered), the United States is at the top of the list with 264 billion barrels of recoverable oil reserves, followed by Russia with 256 billion, Saudi Arabia with 212 billion, Canada with 167 billion, Iran with 143 billion, and Brazil with 120 billion (Table 1).

Why was the Keystone pipeline shut down? ›

On November 6, 2015, the Obama administration rejected the Keystone XL pipeline project, citing economic and environmental concerns. Financial commitment towards completion of the pipeline was weakened by a number of technological factors as well.

Where is the largest oil reserve in the US? ›

Alaska is the fifth-most oil rich state (when including the Gulf of Mexico), with more federal land having been made available for oil drilling by the outgoing U.S. government in 2021.
...
Proved reserves of crude oil in the United States as of 2020, by state.
CharacteristicReserves in million barrels
--
7 more rows
Mar 3, 2022

Does Alaska have more oil than Texas? ›

Prudhoe Bay remains the largest conventional oil field in North America. Four of the nation's top ten conventional producing oil fields are located on the North Slope. Alaska ranks sixth behind Texas, North Dakota, New Mexico, California, and Oklahoma in daily oil production.

Why are no new refineries being built? ›

New refineries are unlikely to be built in the United States due to daunting environmental standards and policies that the Biden administration has been implementing to reduce petroleum product consumption in the future. Shockingly high prices for energy is the outgrowth of those policies.

How long will U.S. oil reserves last? ›

Present U.S. demand for petroleum products is about 20 million barrels per day, so 800 billion barrels would last for more than 400 years if oil shale could be used to meet a quarter of that demand.

How much oil is left in the US drill? ›

Oil Reserves in the United States

The United States has proven reserves equivalent to 4.9 times its annual consumption. This means that, without imports, there would be about 5 years of oil left (at current consumption levels and excluding unproven reserves).

Does the US export more oil than it imports? ›

Overall, the United States imports more than it exports, making it a net importer of petroleum. In 2017, imports provided 19% of the country's demand for petroleum. Most of the petroleum imported by the U.S. is crude oil (70-80% of total petroleum imports, varying slightly from year to year).

Who controls the price of oil today? ›

The price of oil fluctuates according to three main factors: current supply, future supply, and expected global demand. Members of OPEC control 40% of the world's oil.

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