© Reuters. Cargo shipping containers are seen in a storage yard surrounded by petroleum storage tanks and oil refineries in Carson, California, U.S., March 11, 2022. Picture taken March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan
By Jarrett Renshaw and Laura Sanicola
WASHINGTON (Reuters) – U.S. Energy Secretary Jennifer Granholm expressed interest in potentially lifting smog-fighting gasoline regulations and backed off a plan to ban fuel exports during an emergency meeting on Thursday with top refiners, two sources familiar with the talks said.
The two sides entered the meeting with a promise to work together in good faith, but amid a tense moment for President Joe Biden and Big Oil. They left still far apart on long-term solutions, but with a promise to continue talks, the sources said.
The president has criticized industry CEOs for reaping huge profits from a fuel supply crunch exacerbated by Russia’s invasion of Ukraine.
Granholm struck a more conciliatory tone, the sources said, and acknowledged the lack of viable short-term options to combat high prices.
Industry members went into the meeting hoping to convince the Biden administration not to ban U.S. fuel exports to combat record gas prices. Granholm all but took the option off the table as a short-term solution, the sources said.
The White House had already been mulling lifting summer gasoline restrictions that require refiners and blenders to avoid lower-cost components like butane to prevent smog. Granholm told refiners that the White House will discuss the issue with the U.S. Environmental Protection Agency, the sources said.
The Department of Energy did not immediately respond to requests for comment on the meeting.
The average price of gasoline was $4.955 per gallon on Wednesday, according to data from the American Automobile Association, 37 cents more than a month ago, and $1.89 more than a year ago.
Refiners cut capacity during the COVID-19 crisis shutdowns, but post-pandemic demand and a global fuel crisis after Western nations sanctioned Russian oil have driven prices up.
Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and other refining giants reported a massive jump in profits at the end of 2021 and the first quarter of this year and have showered shareholders with buybacks and dividends.
The White House has targeted the refining industry’s decision to idle about 1 million barrels per day of production capacity since 2020, arguing they should use their bumper profits to restart plants or units and help fill the supply gap that is driving up prices.
Refiners have a “patriotic” duty to help with supply, the White House has said.
The meeting Thursday included executives from Exxon Mobil, Chevron, Marathon and Phillips 66 (NYSE:PSX).
Refiners say investing in reopening plants carries significant financial risks. The Biden administration came into office vowing to shift the country away from fossil fuels that contribute to climate change and has secured billions of dollars for the electric vehicle industry.
Biden, a Democrat, on Wednesday called on Congress to pass a three-month suspension of the federal gas tax, but that was met with opposition from lawmakers within his own party who say it may provide little relief while blowing a hole in a Highway Trust Fund budget that is funded by the gas tax.
A group of 25 drilling and pipeline industry groups including the American Petroleum Institute and the Independent Petroleum Association of America sent a letter to Biden on Thursday urging him to visit America’s vast energy sources ahead of a July trip to Saudi Arabia, where the president is expected to encourage the oil-rich country to boost production.
“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,” the group wrote.