Are you spending over $100 to fill your tank?
The Biden administration is reaching out to the oil industry to inquire about restarting shuttered refineries, as the White House scrambles to address record high-gasoline prices that are setting off political alarm bells ahead of the midterm elections.
Members of the National Economic Council and other officials have inquired within the industry about factors that led some refining operations to be curtailed and if plans are underway to restart capacity, a person familiar with the matter said. The person, who wasn’t authorized to speak on the record, added no direct ask to restart operations was made.
The White House didn’t immediately respond to a request for comment.
The administration’s efforts come as the average price of a gallon of regular unleaded gasoline stood at a record US$4.60 Wednesday, just as the summer driving season is set to begin. In California, prices are more than US$6 a gallon, according to AAA.
But the White House, which has established an interagency “energy markets team” that has been monitoring energy supply and price data for the past several months, has few good options available to tame gasoline prices. Pump prices have have sky-rocketing amid Russia’s invasion of Ukraine that sent oil futures north of US$100 a barrel.
More than one million barrels a day of the country’s oil refining capacity — or about five per cent overall — has shut since the beginning of the pandemic. Elsewhere in the world, capacity has shrunk by 2.13 million additional barrels a day, energy consultancy Turner, Mason & Co. estimates. And with no plans to bring new US plants online, even though refiners are reaping record profits, the supply squeeze is only going to get worse.
“They are in a very difficult political situation,” said Mike Sommers, president of the American Petroleum Institute, the oil industry’s top US lobbying group. “They are looking for every option that is out there.”