President Joe Biden's administration on Wednesday released a letter it addressed to seven oil and gas companies, urging them to take steps to lower the cost of fuel as the price of a gallon of on-highway diesel crosses $6 in many regions across the country.
Biden was sharply critical of the companies' "historically high profit margins for refining oil into gasoline, diesel and other refined products" while average consumers suffer, but also seemed to acknowledge that problems with the country's refinery capacity went beyond mere corporate greed.
"Since the beginning of the year, refiners’ margins for refining gasoline and diesel have tripled, and are currently at their highest levels ever recorded," according to the letter. But in the very next line, Biden put the historic squeeze into context, calling refinery capacity a global concern and noting that during the pandemic, about 3 million barrels per day of capacity went offline. Previous reporting from this publication has revealed that a variety of factors have hit refinery capacity. Those include weather events, labor shortages, incidents like a 2019 fire at a major refinery, and a lack of capital expenditures on increased oil capacity, due to a shaky political and business climate around fossil fuels.
[Related: Who is to blame for record high diesel prices?]
"I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office," Biden wrote. "But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable."
Biden added his 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." He mentioned ongoing efforts to release oil from the Strategic Petroleum Reserve and expanding access to E15 (gasoline with 15% ethanol).
On Tuesday, the American Petroleum Institute, which represents the oil and gas industry, issued a letter of its own.
