By Robert Bradley Jr.
“The most important near-term action the Administration can pursue is to unequivocally take counterproductive policies and rhetoric off the table. Policies like export bans or windfall profit taxes may not only hamper the industry’s ability to fully supply the market, but also create the uncertainty that dissuades potential new investments needed to increase domestic energy production.”
“… accusations of profiteering and calling into question our members’ patriotism are not supported by the facts and do a disservice to the millions of workers who show up to work every day … to power the economy.”
It is good to see the leading oil and gas trade associations on the offensive against the Biden Administration’s anti-affordable-energy agenda. With the moral high ground and the attention of regular citizen/voters, there is every reason for these consumer-driven industries to stop playing defense and woke politics. The other side, after all, cannot be appeased but only temporarily placated.
On June 23rd, at the request of the White House, 18 oil and gas groups met with DOE Secretary Jennifer Granholm to talk about increasing oil supplies to reduce prices for Americans. Biden chose not to attend, and Granholm followed her script to be outwardly sympathetic but offer nothing in response to the industry’s commonsense specific requests (ten here, nine of which are free-market).
The industry followed up after the meeting with politeness but firmness. Their June 29, 2022, letter to Secretary Granholm from Chet Thompson, head of the American Fuel and Petrochemical Manufacturers, and Mike Sommers, head of the American Petroleum Institute, follows.
On behalf of the refining industry executives you met with last week, we want to thank you for the constructive and open exchange of views. Our industry remains committed to meeting the challenges of supplying growing global energy demand in an affordable, reliable, and sustainable way.
As you know, the U.S. refining industry is operating at or near maximum utilization. Our members are also investing in refining capacity. This includes 300,000 barrels per day of new capacity expected to come on-line next year.
As we outlined in our letter to President Biden last week – and as the experts from the Department of Energy have repeatedly confirmed – crude oil, gasoline, and diesel are all globally-traded commodities and priced on the global market. Our members do not control the price of the products they sell. The primary drivers of current consumer gasoline and diesel prices are the price of crude oil and a supply/demand imbalance resulting from the global emergence from COVID, the war in Ukraine, and inflationary pressures.
The most important near-term action the Administration can pursue is to unequivocally take counterproductive policies and rhetoric off the table. Policies like export bans or windfall profit taxes may not only hamper the industry’s ability to fully supply the market, but also create the uncertainty that dissuades potential new investments needed to increase domestic energy production.
Likewise, accusations of profiteering and calling into question our members’ patriotism are not supported by the facts and do a disservice to the millions of workers who show up to work every day – including the past two years throughout a pandemic — to supply the fuels and petrochemicals needed to power the economy.
Our industry also supports millions of Americans through retirement funds like 401-Ks and private and public pension funds, including those for teachers, firefighters, and other labor unions.
There is no silver bullet that will quickly address all the underlying issues needed to bring down energy prices or spur new investments in domestic refining capacity in the near-term. Today’s situation did not materialize overnight and cannot be quickly solved.
However, the Administration should signal that the U.S. is committed to a long-term investment in a strong U.S. refining industry and align policies to reflect that commitment. Those signals should include support for building U.S. infrastructure, lifting restrictions on oil and gas development, addressing escalating regulatory compliance costs, allowing all technologies to compete to reduce emissions, modernizing fuels policies, and ensuring capital markets are functioning for all participants.
Finally, we share your desire to work together on preparing for the upcoming hurricane season. Our associations and members have historically worked well with the Department of Energy, Department of Homeland Security, the Federal Emergency Management Agency, and state and local partners to prepare, respond, and recover from severe weather events like hurricanes. We would welcome the opportunity to meet and discuss how to best coordinate moving forward.
The U.S. refining industry is one of the safest and most efficient in the world, operating among the highest environmental standards. We are confident that with supportive policies, we can overcome today’s challenges and meet the growing needs of global energy demand.
We stand ready to continue the collaborative conversation that the American people deserve.
Kudos to AFPM and API for this letter. Keep the pressure on and keep the Administration playing defense. They are employing misdirection. So, don’t try to appease, just lead.
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July 6, 2022