As part of a range of actions this week on gas prices, the Biden administration has summoned the heads of seven top oil refining companies to Washington after a week of tense back-and-forth with industry leaders.
The CEOs will meet with Energy Secretary Jennifer Granholm after the president blasted their high profits as “not acceptable” in a recent letter to the companies. In one response, Chevron (CVX) pushed back by saying that Washington’s approach was actually the culprit for high prices.
Nevertheless, President Joe Biden’s aides say they hope for a constructive conversation.
“Let’s put every idea on the table so this is not the president just scolding,” White House senior adviser Gene Sperling told Yahoo Finance Live on Wednesday. He added that Biden will be “giving a stern message to everybody to do everything you can, but the goal is results.”
The price of gas has risen dramatically in recent months, with the most recent data from the American Automobile Association showing prices hovering at around $5 a gallon. The increases have been driven by a range of factors, most notably disruptions in the global oil markets following Russia’s invasion of Ukraine.
The companies in the spotlight in addition to Chevron, all of which received a letter from the president last week, are Marathon (MRO), Valero (VLO), ExxonMobil (XOM), Phillips 66 (PSX), BP, and Shell (SHEL).
Energy Secretary Jennifer Granholm previewed her upcoming meeting with oil executives during at the White House on June 22. (Drew Angerer/Getty Images)
“I hope they’ll come up to the table with some real ideas and practical steps in the near term,” said Biden, who is not scheduled to attend the meeting, during a speech on Wednesday.
‘We need an honest dialogue’
The White House’s main push is for companies to ease what they see as a refining bottleneck, the middle stage between crude oil production and the gas pump. The administration contends that some refining capacity was taken offline during the pandemic and hasn’t come back quickly enough.
Chevron blames the problems on regulations and a lack of clarity from DC. “We need an honest dialogue,” Chevron CEO Michael Wirth, who will be attending the meeting, wrote recently.
Industry observers have also been skeptical about how much wiggle room oil companies really have — and how quickly anything could change in the short-term. They note that crude processing has been running at 93%-94% of theoretical maximum operable capacity in recent weeks.
“We are going into this to have an earnest conversation … Let’s see how that conversation goes,” Granholm said in a press briefing in response to a question about how she will respond if the refiners “don’t play ball.” She is not ruling out out use of the Defense Production Act to force oil companies to ramp up supply, which could ultimately push prices down.
A senior administration official, in previewing the hearing, said they hope the discussion will include “ways the federal government can be helpful to bring that additional capacity online as quickly as it possible.”
Oil experts predict prices to drop slightly in the coming days, largely due to market forces, which perhaps will ease tensions at the meeting with industry executives.
Sperling echoed the Biden team’s hope that getting everyone in a room could lead to progress. But, he stressed, “I don’t think that people should be offended because the president is standing up for consumers who are being squeezed at the gas pump.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.