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Big oil executives to get ‘tough message’ on gas prices from Biden administration

Big oil executives to get ‘tough message’ on gas prices from Biden administration

As part of several 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 tensions with industry leaders.

After the President, the CEO will meet with Energy Secretary Jennifer Granholm destroyed your high profits As “not acceptable” in a recent letter to the companies. In one reaction, Chevron (CVX) pushed back Having said that Washington’s approach was actually to blame for the high prices.

Still, aides to President Joe Biden say they expect a constructive dialogue.

“Let’s put every idea on the table so it doesn’t scold the president,” senior White House adviser Gene Sperling told Yahoo Finance Live on Wednesday. He added that Biden will “give a strong message to everyone to do everything you can, but the goal is results.”

With the most recent figures from the American Automobile Association, the price of gas has increased dramatically in recent months. Showing prices hovering around $5 per gallon, The increase has been driven by a number of factors, most notably the disruption in global oil markets following Russia’s invasion of Ukraine.

Besides Chevron, companies making headlines, all of which received a letter from the president last week, are Marathon (MRO), Valero (VLO), ExxonMobil (XOM), Philips 66 (PSX), BP and Shell (SHEL). )

Energy Secretary Jennifer Granholm previews her upcoming meeting with oil officials at the White House on June 22. (Drew Anger/Getty Images)

“I hope they come to the table in the near future with some real ideas and practical steps,” said Biden, who is not scheduled to attend the meeting, during Wednesday’s speech,

‘We need an honest conversation’

The White House’s main thrust is for companies to reduce what they see as a refining bottleneck, the middle stage between crude oil production and gas pumping. The administration argues that some solvency was taken offline during the pandemic and did not return quickly.

Chevron blamed the problems on the rules and a lack of clarity from DC. “We need an honest conversation,” said Chevron CEO Michael Wirth, who will attend the meeting, Recently wrote.

Industry observers are also skeptical about how much wiggle room oil companies really have — and how quickly anything can change in the short term. They note that crude processing operates at 93%-94% of theoretical maximum operating efficiencies. in recent weeks.

“We’re going to have a serious conversation on this … let’s see how the conversation goes,” Granholm said In response to a question at a press briefing on how she would react if the refiners “don’t play the ball”. She isn’t ruling out the use of the Defense Production Act to force oil companies to increase supplies, which could eventually push prices down.

A senior administration official previewing the hearing said he hoped the discussions could “help the federal government bring that additional capacity online as quickly as possible.”

Oil experts expect prices to slide slightly in the coming days, mainly due to market forces, which will probably ease tensions in the meeting with industry executives.

Sperling echoed the Biden team’s hope that getting everyone in the same room could lead to progress. But, he insisted, “I don’t think people should be outraged because the president is standing up for the consumers who are being squeezed at the gas pump.”

Ben Verschul is a writer and producer for Yahoo Finance in Washington, DC.

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