Exxon Mobil said it’s been investing more than any company to develop U.S. oil and gas supplies, including to increase refining capacity, in a letter Wednesday responding to President Joe Biden’s statements that U.S. companies are not doing enough to bring down the price of gasoline.
While the push and pull between the oil and gas industry and Washington, D.C., is nothing new, the president has been stepping up his rhetoric recently and singling out Exxon Mobil.
At the heart of the debate is record-high gasoline prices that are hurting Americans at the pump and contributing to worsening inflation. While the president and Big Oil have little control over the factors influencing the market right now – namely a supply and demand imbalance exacerbated by pandemic recovery and Russia’s war against Ukraine – the two have been pointing fingers at each other.
In its response, Exxon Mobil calls on the administration to pass measures more favorable to the oil and gas industry. In the short term that includes waivers for certain fuel specifications and other emergency acts often taken after hurricanes, the company said.
“Longer term, government can promote investment through clear and consistent policy that supports U.S. resource development,” read Exxon Mobil’s letter to the president, “such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines.”
For his part, the president has been calling on domestic oil and gas producers to ramp up drilling in hopes of easing prices at the pump. Most companies already had planned increases this year, and instead of speeding up those plans they’re heading investor calls for disciplined growth and spending. That also means more money is being returned to shareholders.
While at an event last week, Biden took aim specifically at Exxon Mobil, accusing it of hoarding cash even though the company made “more than God last year,” referring to the $23 billion in profits the oil supermajor recorded last year.
“The reason they’re not drilling is they’re buying back their own stock, which should be taxed quite frankly, buying back their own stock and making no new investments,” Biden said. “So I always thought Republicans are for investment. Exxon: start investing and start paying your taxes, thanks.”
Biden followed up with a letter this week addressed to Exxon’s CEO Darren Woods and sent to heads of other major oil companies calling on them to increase refining capacity in an effort to bring more gasoline to market and lower prices.
Since the onset of the pandemic the refining capacity in the U.S. has decreased by about 800,000 barrels of crude oil per day, and globally it’s gone down by 3 million barrels per day. Last week, refineries were operating at 94 percent of their capacity.
In Exxon Mobil’s response the company said it’s invested more than $50 billion and increased U.S. oil production nearly 50 percent over the past five years. The company also pointed to its efforts to boost refining capacity.
“Specific to refining capacity in the U.S., we’ve been investing through the downturn to increase refining capacity to process U.S. light crude by about 250,000 barrels per day – the equivalent of adding a new medium-sized refinery,” the letter said. “We kept investing even during the pandemic, when we lost more than $20 billion and had to borrow more than $30 billion to maintain investment to increase capacity to be ready for post-pandemic demand.”
In Houston the average for a gallon of regular gasoline was $4.67 on Thursday, according to AAA, while the national average is hovering around $5 per gallon.