The oil industry is imploring Energy Secretary Jennifer Granholm to forswear limiting petroleum exports as the Biden administration tries to bring down consumer fuel costs or else risk sending prices higher.
Leading oil trade groups the American Petroleum Institute and American Fuel & Petrochemical Manufacturers asked the administration to “disavow” export restrictions on Tuesday, days after a meeting between Granholm and industry leaders that left the two sides at odds about what’s driving high retail fuel prices and what can bring them down.
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The groups came out of that meeting Friday saying administration officials declined to rule out export limits, something the industry contends would run counter to the administration’s goals to balance the fuel markets, help supply allies with energy, and clip the influence of Russia, a major petroleum exporter.
“We urge the Biden administration to speak clearly and with one voice to disavow a refined product export ban or export restrictions, which would only further raise global and U.S. prices, roil energy markets, and deter needed investments across the U.S. energy supply chain,” API head Mike Sommers and AFPM head Chet Thompson said in a letter to Granholm on Tuesday.
Their letter follows the Friday meeting between administration officials and industry leaders, after which Granholm called out companies like ExxonMobil for making large profits this year. Their healthy margins have been enabled by “a failure of companies to maintain sufficient regional inventories to buffer demand when refineries go offline,” she said in a statement.
The sector exported record volumes of refined products in the first half of the year, Granholm also noted, and fuel prices in the West and Midwest are again rising “because low inventories are not sufficient to meet their customers’ needs,” she said.
Granholm had already asked top refiners in August to limit exports to beef up domestic inventories ahead of peak hurricane season. If they wouldn’t do so voluntarily, “the Administration will need to consider additional Federal requirements or other emergency measures,” she said at the time.
Granholm’s Friday statement did not say the administration intends to restrict or ban exports in a bid to reduce prices. As recently as Sep. 23, she said export restrictions were not being considered.
But API and AFPM, whose representatives participated in the meeting, said afterward that the administration “refuses to rule out limitations on exports.”
The groups’ Tuesday letter also disputed Granholm’s post-meeting characterizations and said markets in Latin America, and Europe especially, need U.S. petroleum products.
“The implication of your press release is that exports come at the expense of domestic fuel inventories and that U.S. refiners should stop exporting to build inventories in parts of the country where current inventories are below the 5-year average,” Sommers and Thompson said.
“Restricting exports from the U.S. Gulf Coast, for instance, will do little to help build inventories on the West Coast because there is not a readily available or economic way to transport Gulf product to the California coast,” they added.
Refiners have blamed the high fuel prices on the sizable reductions in refining capacity in recent years, in addition to the higher price of crude oil.
The topic of product exports has bubbled up on multiple occasions since the war in Ukraine began, which helped to send oil prices well above $100 per barrel for months on end, driving retail fuel prices to new nominal records.
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When Granholm first met with refiners earlier in the summer, around the time when retail gasoline prices were at their peak, she said President Joe Biden wasn’t prepared to pursue export restrictions but that Biden was “not willing to take tools off the table.”
At the same time, she acknowledged that “there may be consequences that have to be considered on doing something like [an export ban], that would have adverse impacts on everyday citizens.”
Export restrictions covering petroleum products or natural gas, shipments of which some Democrats want limited, would frustrate the Biden administration’s initiative to supply allies in Europe with more fossil fuels while allies there work to reduce imports from Russia.
The White House is ruling out a ban on natural gas exports, Reuters reported Tuesday.
