(Bloomberg) — Senior Biden administration officials pressed executives from some of the largest US gasoline producers to curtail overseas sales during a tense meeting Friday afternoon, suggesting that without voluntary action, the government could force the industry to stockpile more fuel in US tanks.
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Energy Secretary Jennifer Granholm and other administration officials chastised the industry representatives for low diesel stockpiles, floating the possibility of export limits and a requirement for oil companies to hold minimum fuel inventories inside the US, according to people familiar with the matter who asked not be named describing the private virtual meeting.
It was the latest in a series of meetings between the Biden administration and oil companies this year, as the White House seeks to tamp down energy costs that are contributing to high inflation. An earlier session in June was marked by a more robust back-and-forth conversation about the market and hurricane preparedness, the people said.
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In addition to Granholm, the session included representatives from Exxon Mobil Corp., Marathon Petroleum Corp., Phillips 66 and Shell Plc, as well as National Economic Council director Brian Deese and Amos Hochstein, a senior energy adviser at the State Department, according to a person familiar with the matter.
Although the session was billed as a discussion of refining operations and fuel supplies in the wake of Hurricanes Fiona and Ian, the storms were not a focus, the people said. Instead, discussion centered on lower-than-normal inventories of fuel, with diesel stocks 20% below their five-year average.
“The president’s team emphasized that energy companies with record-high profits, record high exports and record-low inventories must step up and bring down prices at the pump,” the Energy Department said in an emailed statement.
Administration officials stressed their concerns with increased petroleum product exports and complained companies were collecting high profits while failing to address low fuel inventories, the people said.
At least one administration official also raised the prospect of a minimum inventory requirement, under which refiners or other participants in the US fuel supply chain could be forced to store more gasoline, diesel and other petroleum products domestically. Particulars of such an inventory requirement were not discussed, including how it might be implemented, what companies would bear the compliance burden and what quantity of supply might be sufficient.
The exchange comes amid increasing worries about the relatively low fuel stocks — including diesel — in the Northeast US, which is reliant on imports to meet demand. The closing of refineries on the East Coast, in Canada and in the Caribbean has exacerbated the region’s reliance on supplies from Europe.
Analysts say gasoline, diesel and other refined products from the Gulf Coast can’t entirely fill the gap, given constraints on pipeline capacity and available US-flagged vessels permitted to deliver the fuel among domestic ports.
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Oil industry trade groups said the administration’s approach was misguided.
“The focus of this administration should not be on trapping product in the United States or diverting fuel away from retail sales and into storage, but rather on how to better produce and more affordably move US product within the United States,” the American Fuel and Petrochemical Manufacturers and American Petroleum Institute said in a joint statement.
President Joe Biden twice warned this week against oil companies raising gasoline prices following the hurricanes. While gasoline prices are down by more than a dollar a gallon on average across the US since peaking in June, they remain relatively high. The average price of regular unleaded has risen for 10 straight days and was at $3.797 a gallon as of Thursday, according to data from AAA.
The White House has taken a series of steps this year to lower fuel prices, including an unprecedented release of crude from the US emergency stockpile. Last month, the administration warned refiners it might take “emergency measures” to address fuel exports amid low inventories.
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Shortly before the meeting Friday, Granholm said in a statement that energy companies are making record profits and that refiners and retailers were passing costs on to consumers.
“This is a time for American energy companies to take action to lower prices for consumers and to rebuild inventories of gasoline and diesel in this country that are below the five-year range,” she said.
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