Biden tells oil refiners: Produce more gas, fewer profits

[Omaha Steve]

Source: AP

By JOSH BOAK

President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record high prices at the pump.

“The crunch that families are facing deserves immediate action,” Biden wrote in the draft of a letter to oil refiners obtained by The Associated Press. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”

Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for the president’s fellow Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, but it accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets.

The government reported on Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years.



President Joe Biden addresses the AFL-CIO convention, Tuesday, June 14, 2022, in Philadelphia. (AP Photo/Susan Walsh)


Read more: https://apnews.com/article/russia-ukraine-biden-covid-health-f73c882b0664a5d5dd62635a9a65364c

[mucifer]

1. I am sure they are all laughing at President Biden. they don't care. Because of the filibuster

President Biden is powerless to stop them.

[BumRushDaShow]

2. They also know if they precipitate a recession

they will be back to how it was during the pandemic, with a glut and near -$40/bbl oil.

[ArizonaLib]

9. Are the producers betting that a recession won't hurt them as bad as in spring/summer, 2020

or is it about the midterms? Or Both?

Part of the reason I ask is because I was working to get around to comparing the increase in tobacco products during the 90's when the tobacco companies were being pursued by the Clinton administration with this increase in prices. I remember when prices went up to $4 - hybrids were hitting the road.

Anyhow, I appreciate the graphics you include in your posts. We owe you big!

[BumRushDaShow]

18. I wouldn't be surprised if it is a game of chicken

They know what they are doing is wrong but like the good little sadists that they are, they are going to squeeze as much as they can before backing off.

I heard that Biden mentioned "windfall profits" and Ron Wyden trying to find a way to make it so -

Biden Ally Floats 21% Surtax on Oil Profits to Blunt Inflation

By Nancy Cook and Laura Davison
June 14, 2022, 1:23 PM EDT Updated on June 14, 2022, 2:35 PM EDT



Oil companies that record a profit margin better than 10% would face a new federal surtax under a plan developed by a key senator, as Democrats and the White House struggle to curb US energy costs and broader inflation.

The proposal by Senator Ron Wyden, an Oregon Democrat who chairs the tax-writing Finance Committee, would mean oil companies face federal taxes of as much as 42% on profits considered excessive -- the 21% US corporate tax rate plus a new 21% surtax, according to two people briefed on the proposal.

Wyden has yet to release his plan publicly, and he’d likely need all 50 in the Senate Democratic caucus to support it in order to overcome united Republican opposition. He’s among several Democratic lawmakers, including Senator Sheldon Whitehouse and Representative Peter DeFazio, who have discussed targeting what they consider excessive oil-company profits.

“The proposal I’m developing would help reverse perverse incentives to price gouge, by doubling the corporate tax rate on companies’ excess profits, eliminating egregious buybacks and reducing accounting tricks,” Wyden said about the proposal he plans to introduce in the coming weeks. “By contrast, companies that provide relief to consumers by either reducing prices or investing in new supply would not be affected.”

https://www.bloomberg.com/news/articles/2022-06-14/biden-ally-floats-21-surtax-on-oil-profits-to-blunt-inflation

And you are welcome - re: the images! I have found them helpful to keep around so I can reference later for comparisons!

[Bengus81]

24. They'll keep the gouging going until their Rep buds take back the House and Senate

Then like fucking MAGIC the price at the pump will drop and drop and drop between Nov and January 2023. That gives them a lot of time to make billions more.

[BumRushDaShow]

25. If Democrats can use reconciliation

(the "tax one" like was used to do the tax cuts for the wealthy, which is an option still left this FY after the "spending" one was used for BIB), then some of this "speculative" crap might be reigned in - that's assuming all 50 Democrats go along (and/or a couple Republicans cross over).

I think the floating of Wyden's effort might be a trial balloon to see what the reaction might be. And this is especially if some tariffs do get dropped as has been hinted.

[Marthe48]

17. I was thinking fondly of those days

I never dreamed big oil would recover, let alone drop the U.S. to its knees by diddling the economy.

[BumRushDaShow]

19. Oh I *knew* they were going to make up for that

And the irony is that what happened then was caused by Saudi and Russia (pre-invasion) getting into an oil production/price war in the middle of a pandemic, and glutting the market (part of it in order to put the U.S. fracking industry out of business too, knowing the higher cost per/bbl oil price needed for them to just break even).

[Marthe48]

20. I just heard last night that U.S. oil co. are exporting more than ever

We are leading the world in exports.
https://tradingeconomics.com/united-states/exports-of-crude-oil

Here is an April 2022 article from Bloomberg
https://www.bloomberg.com/news/articles/2022-04-20/u-s-oil-exports-soar-as-world-works-to-replace-russian-supplies

[BumRushDaShow]

22. In general, we have been

I remember when we first broached it back in 2019 and have generally been holding it more or less.

I have posted the below several times before taken from here - https://www.forbes.com/sites/rrapier/2019/07/14/ten-countries-that-dominate-fossil-fuel-production/?sh=34d8072f5b13

TOTAL



BREAKDOWN

[moose65]

28. Am I correct about this?

Seems to me that it used to be illegal for the US to export oil (and possibly oil products as well). Is that correct? Was that policy repealed under Obama?

[BumRushDaShow]

29. In 2015, Congress lifted the export ban!

U.S. leaders agree to lift 4-decade ban on oil exports


Rick Jervis USA TODAY
Published 12:38 p.p. ET Dec. 16, 2015 | Updated 4:35 p.m. ET Dec. 16, 2015



A bill to lift the 40-year-old ban on U.S. oil exports, changing the dynamic of U.S. producers in the world energy market, could be pushed through Congress by week's end thanks to a deal reached this week.The measure was folded into a massive tax-and-spending bill that averted another government shutdown. The move was favored by Republican lawmakers and oil industry leaders. In return, Democrats won a five-year extension of credits for wind and solar energy producers and a renewal of a land and water conservation fund and nixed attempts to roll back President Obama's environmental regulations.

The ban on U.S. exports stretches back to the 1970s during chronic oil shortages. It was imposed after the Organization of Petroleum Export Countries placed an oil embargo on the U.S. when it sided with Israel in the Yom Kippur War of 1973, slamming the American economy and leading to long lines at the gas pump. GOP and industry leaders have called the ban antiquated and applauded the proposal to lift it."We have the best technology, the best oil and over time we will drive out Russian oil, we will drive out Saudi, Iranian," Republican Rep.

Joe Barton of Texas said in an interview with Bloomberg. "It puts the United States in the driver's seat of energy policy worldwide. It is a huge victory." The move to abolish the ban on oil exports comes as crude prices have plummeted to some of its lowest points in years and technology has unlocked vast, formerly unreachable reservoirs of oil, creating an overabundance of U.S. oil. West Texas Intermediate crude was selling for less than $37 a barrel Wednesday, down from more $100 last year.

Industry experts and producers generally applauded the move but warn that the low price of oil remains the biggest hurdle in propping up the sagging balance sheets of producers -- something exports won't impact. The low price and glut of oil is still keeping many producers from pumping at full capacity and forcing others to stop altogether, said Thomas Tunstall, senior research director at the University of Texas at San Antonio' Institute for Economic Development. Oil from South Texas or North Dakota's Bakken shale is a lighter crude that could fetch better prices on the world market than from U.S. refineries, which are optimized for heavier crude, he said.

https://www.usatoday.com/story/news/nation/2015/12/16/oil-exports-ban-congress/77420824/

It was one of those "trade-off" things -

U.S. Markets
December 18, 20159:22 PM Updated 6 years ago
Congress kills U.S. oil export ban, boosts solar, wind power

By Timothy Gardner


WASHINGTON (Reuters) - The U.S. Congress voted on Friday to repeal the 40-year-old ban on exporting U.S. crude oil in an energy policy shift sought by Republicans as part of a bipartisan deal that also provided unprecedented tax incentives for wind and solar power.

The Senate, on a 65-33 vote, approved lifting the ban and providing five-year extensions of tax breaks to boost renewable energy development as part of a $1.8 trillion government spending and tax relief bill that President Barack Obama quickly signed into law.

The House of Representatives passed legislation containing the energy provisions earlier in the day by a 316-113 tally.

The energy deal was hammered out in secret talks among congressional leaders over two weeks.

(snip)

https://www.reuters.com/article/us-usa-fiscal-oil/congress-kills-u-s-oil-export-ban-boosts-solar-wind-power-idUSKBN0U121U20151219

Looks like it was slid onto an Omnibus appropriations bill.

[myohmy2]

3. "Produce more gas, fewer profits"

...or else...??

...

[Walleye]

4. This is partly the result of cutting corporate taxes

[MichMan]

5. Do you think raising taxes on corporations would increase supply and lower prices?

[Walleye]

6. I just think they'd invest more of their profits in their company instead of paying off fat cats

[SergeStorms]

8. They are investing in themselves.....

they're buying back their stock to keep its price artificially high.

[Walleye]

10. Well if the system was working right they be investing in production and equipment and personnel

[Colbert]

26. Very Little Incentive

There's very little incentive to invest in expansion of production and equipment for an industry that governments throughout the world are actively trying to sunset. Where's the ROI for that?

It gets to the point where there's hardly any incentive to maintain the equipment that's currently online ... just the minimum necessary to keep it functioning (and they're probably taking exaggerated safety risks even with that).

There probably should have been a strategic refining reserve (capacity that could be brought online if needed) ... but good luck selling that idea.

[Walleye]

27. I get it. They are looting as much cash as they can before the industry goes bust

[Colbert]

31. Two Way Street

Last edited Sun Jun 26, 2022, 04:25 PM - Edit history (1)

That's basically it; but it's a two way street. Out of one side of its mouth, the world has been calling the industry Hitlerian monsters producing a product that's obnoxious and undesirable; while out of the other side of its mouth begging for a few last snorts of that undesirable and obnoxious product. Idealistically, it's like that scene out of Moneyball

David, you're 37. How about you and I be honest about what each of us want out of this? I want to milk the last ounce of baseball you got in you, and you want to stay in the show.

Pragmatically, movie scenes are a lot messier when they play out in real life, but that's the reality of life ... like politics; if you can each get 25% of what you want, then it's a win-win.

[Walleye]

32. Interesting. I can see it. Thanks for the clip

[Calista241]

36. Nobody is buying stock back in current market conditions. N/t

[aocommunalpunch]

7. Okay. Oil execs shrug. n/t

[Lonestarblue]

11. Two changes need to be made to stop price gouging like this.

One is to pass a law making corporate stock buybacks illegal, as they once were. They encourage corporate executives to buy their own stock to raise its share prices and thus benefit the shareholders and the top executives whose compensations includes stock that thus becomes more valuable. Most of the 2017 tax cuts for corporations were not used as Republicans claimed to create jobs or better compensate workers. It was used for stock buybacks.

The second need is to deal with the excessive CEO and other executive pay that allows corporate heads to reward themselves at the expense of their workers and their customers as they follow predatory pricing practices, which is exactly what the oil company execs are doing now. Most of their current excessive profit is going for stock buybacks, not to spend money on producing more gas by opening paused refineries.

Unfortunately, with Manchin and Sinema against Biden’s program, those changes won’t pass.

[Raster]

13. And the more stock they buy back, the BIGGER their bonus checks.

Also, #BigPetroleum is FIRMLY in the GOP* corner. They know the GOP* will allow the continued degradation of our environment and the GOP* will do NOTHING to hinder #BigPetroleum in any way.

The price at the pump is #BigPetroleum trying to return the GOP* to full power.

[Marthe48]

21. agree

nt

[Calista241]

37. There's not a single smart company that's buying their own stock

In current market conditions.

[Bayard]

12. Pull their damn government subsidies!

I've never understood why we're still doing that.

[Raster]

14. Nationalize the Petroleum Industry!!!

They already do a huge amount of drilling on public lands.

They have minimized the ecological risks to themselves, but increased it to us.

They are already HEAVILY SUBSIDIZED by our government.

[JCMach1]

34. We may very well have to as the switch to electric ramps up...

[melm00se]

15. For refiners

To produce more gas means that they need more crude.

To get more crude they need to buy it from oil producers.

To buy more oil from oil producers creates pressures on supply.

As pressure increases on supply price per crude oil barrel will go up.

As crude oil barrel prices go up, the cost per gallon of gas will go up.

lather, rinse, repeat.

Folks, this is simple economics.

The one thing that works in this situation is when crude oil per barrel price increases, it becomes economically feasible to extract shale oil.

Keep in mind, however, that the US consumes 19.78 million barrels per day and shale oil production, at its recent maximum, was ~1.9 million barrels per day. Before anyone gets excited, the EIA forecasts that a more reasonable level of production would be ~900K barrels per day and extraction is done using fracking technology.

[IronLionZion]

16. I'm sure they'll get right on that

They are making out like bandits if anyone checks their earnings statements and stock prices these days. They love that idiots blame Biden for high gas and diesel prices worldwide.

[bluestarone]

23. My way of thinking here is

RETHUGS, and certain industries are intentionally pounding as many nails in Democrats as they can for the 2024 election! Gonna be a LONG 3 years They are ALL out to destroy our country! Lots to worry about here!

[JCMach1]

30. Wait until the hurricane closures hit in late summer... We haven't seen

Anything yet

[BlueTsunami2018]

33. We don't have the refineries anymore.

The United States has closed and shut down 86 refineries since 1990 including 12 from 2017-2020.

Oil supply is fine, but you can’t produce more gas without refineries.

[oneshooter]

35. But that is GOOD, isnt it? n/t

[BlueTsunami2018]

38. Depends on how you look at it.

More refineries, more supply, lower prices, we might win the midterms. Environment suffers.

Fewer refineries, low supply, high prices, fascists take over. Environment suffers, democracy dies.