US Energy Secretary urges refiners not to increase fuel exports
WASHINGTON (Reuters) – The U.S. Energy Secretary this month urged domestic oil refiners not to further increase exports of fuels like gasoline and diesel, adding that the Biden administration may need to consider take action if factories do not stockpile.
U.S. refiners boosted petroleum product exports this month as domestic crude oil production increased and global fuel demand continued to recover.
Energy Secretary Jennifer Granholm, in a letter sent Aug. 18, urged seven refiners, including Valero, ExxonMobil and Chevron, to stockpile fuels as the United States enters peak hurricane season.
“Given the historic level of U.S. exports of refined products, I again urge you to focus in the near term on building inventory in the U.S., rather than selling current inventory and further increasing exports,” Granholm said in the letter sent to refiners, a copy of which was seen by Reuters.
High exports of U.S. petroleum products have been a concern for President Joe Biden’s administration this summer, as gasoline prices briefly hit a record high of $5 a gallon, helping to push inflation to highs. 40 year highs. Gasoline prices have since dropped to around $3.86 per gallon.
Federal meteorologists have predicted an above-average Atlantic hurricane season, which can be a perilous time for refineries. Persistently high gas prices remain a threat to Biden’s fellow Democrats ahead of the Nov. 8 midterm elections when they hope to retain control of both houses of Congress.
Granholm said the administration is talking with state officials along the East Coast, where gasoline levels are at their lowest in nearly a decade. It is putting gasoline and fuel oil reserves in the northeastern United States, which contain 2 million barrels of fuel, on “active standby” for potential release, and preparing for other emergency actions, a she declared.
The administration hopes businesses will “proactively respond to this need” to build inventory, she said. If that doesn’t happen, the administration “will have to consider additional federal requirements or other contingency measures,” Granholm added, without providing details.
In a high-profile meeting with the same refiners in June, Granholm backed out of a plan to ban US fuel exports, but the idea never quite left the table.
Refiners have said a ban could overwhelm domestic fuel markets and cause some factories to cut production, which could reduce supply and put upward pressure on prices.
In addition, refiners in the Northeast import crude oil and fuels, a trade that could be affected by an export ban.
“Export talks are at best a distraction; at worst, counterproductive for price and supply,” said a source familiar with Granholm’s talks with refiners.
(Reporting by Timothy Gardner; Editing by Bill Berkrot)
Copyright 2022 Thomson Reuters.