Oil CEOs Get Olive Branch From Granholm in Gas-Price Huddle
(Bloomberg) -- The US energy chief struck a conciliatory tone in a high-stakes meeting with top oil executives to discuss soaring gasoline prices on Thursday, though the huddle yielded little progress on a plan to address the supply crunch.
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For more than an hour, Energy Secretary Jennifer Granholm met in Washington with leaders of some of the nation’s top oil companies, discussing possible waivers of air pollution limits on fuel and other changes that could help ease pump prices. The meeting was described by multiple people familiar with the discussion who asked for anonymity because it was closed to the public.
Granholm stressed that the administration wants to collaborate with the industry to bolster refining capacity and boost gasoline production, the people said. Her opening comments attempted to preempt some oil industry arguments by emphasizing that the administration recognizes refiners need more regulatory certainty and supportive market signals from Washington to drive investment in the sector, according to the people.
Although Granholm downplayed the possibility of a ban on the export of gasoline and other refined petroleum products, she didn’t explicitly rule out trade limits, the people said. Administration officials and executives also extensively discussed the potential for waiving gasoline from anti-smog rules that require low-volatility fuel in the summer, a shift that could reduce costs by allowing fuel blenders to mix in less-pricey butane. Such waivers would have to come from the Environmental Protection Agency, which did not have representatives in the meeting, the people said.
The group also strategized ways to prepare for possible hurricane disruptions to fuel refining and supply.
“The secretary set a collaborative tone early on by acknowledging the global nature of oil markets and prices, and that some companies, including Shell, have diminished refining capacity because we’re busy converting century-old assets to produce biofuels,” Gretchen Watkins, president of Shell USA Inc., said in a statement. “There was wide acknowledgment that Americans are feeling a lot of price pain and no ideas were spared in an effort to find solutions to that.”
Watkins urged the administration to accelerate permitting to boost Gulf of Mexico oil and gas production in the short term, while clearing a path for offshore wind development along the East Coast.
President Joe Biden ordered the meeting last week, demanding in letters to the heads of seven oil companies that they explain any reduction in their refining capacity since 2020, when the pandemic spurred plant closures globally. The president also insisted they deliver “concrete ideas that would address the immediate inventory, price and refining capacity issues in the coming months.”
The meeting came amid escalating tensions between the oil industry and the Biden administration, which have risen along with the price of oil and unleaded gasoline, now hovering around $5 per gallon in the US. Biden has cast companies as profiteering from the crisis while oil refiners and producers blame the government’s anti-fossil fuel agenda for chilling investment.
More: Biden Escalates War of Words With Big Oil Ahead of Talks
Participants were to include representatives of Shell, Valero Energy Corp., Marathon Petroleum Corp., Phillips 66, BP America, Chevron Corp. and Exxon Mobil Corp. Several Energy Department officials were also on hand, taking notes and planning follow up with companies after the session, people familiar with the meeting said.
Granholm “made clear that the administration believes it is imperative that companies bring supply online to get more gas to the pump at lower prices,” the Energy Department said in an emailed statement. “She reiterated that the president is prepared to act quickly and decisively, using the tools available to him as appropriate, on sensible recommendations.”
Discussion included some of “the technical, economic and policy hurdles to increasing domestic refining capacity,” the Energy Department said.
Chevron Chief Executive Mike Wirth, who earlier this week faulted Biden for vilifying the industry, described “a constructive conversation about addressing both near-term issues and the longer-term stability of energy markets.”
Earlier on Thursday, oil industry trade groups invited Biden to visit gas fields in Pennsylvania before heading to Saudi Arabia next month.
The small town of Reynoldsville in Pennsylvania is “the heart of the Marcellus Shale in the state where you were born, one of the most prolific natural gas-producing regions in the world,” the trade associations wrote in a letter. “Before you board Air Force One for the Middle East, we hope you will consider taking another look at made-in-America energy.”
The White House didn’t immediately respond to a request for comment on the letter.
(Updates with comments from Energy Department and Chevron CEO from 11th paragraph)
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