New pricing spat between Biden administration and US oil producers

US President Joe Biden’s administration and ExxonMobil chief executive Darren Woods have clashed again over gasoline prices and energy policies.

With midterm elections approaching and the ruling Democrats hoping to keep control of both houses of Congress, the price of gasoline remains a national issue, despite declining steadily from the highs that were experienced in the first half of the year

On 30 September, Secretary of Energy Jennifer Granholm waded into the political fight, releasing a letter blaming US oil and gas companies again for high fuel prices and, in particular, she accused both producers and refiners of excessive profit margins.

“Energy companies are making record profits, with refiners and retailers also posting margins that are well above average — while passing the costs on to consumers,” she said.

“As the President has said, these companies need to focus less on taking every last dollar off the table, and more on passing through savings to their customers.”

A number of Democrats in the House of Representatives and the Senate have also urged Biden to reinstate the ban on crude exports, which was lifted in December 2015, in order to decompress US fuel prices.

Granholm directly criticised ExxonMobil over pricing, saying the company should “step up and show results for American consumers and the American economy”.

Granholm also urged US oil executives to cut back on exports in a letter sent on 26 August. The energy secretary said US producers should be working on increasing domestic crude stockpiles “rather than selling down current stocks and further increasing exports”.

That request led Woods to fire off a letter to the Department of Energy warning against such an idea.

“Continuing current Gulf Coast exports is essential to efficiently rebalance markets — particularly with diverted Russian supplies,” Woods wrote, according to the Wall Street Journal.

“Reducing global supply by limiting US exports to build region-specific inventory will only aggravate the global supply shortfall.”

Woods said there was little US producers could do to reduce prices or increase supply, as pipelines from the US Gulf Coast to the Northeast were already operating at capacity. Putting a ban on exports, he said, would have the unintended consequence of increasing prices further.

Some industry observers said the latest flare-up bore the hallmarks of an election campaign, with Granholm looking to mine a vein of voter of distrust of oil and gas companies, especially among Democratic voter.

"I think it’s more political blustering at the end of the day. If they really wanted to limit exports, it would take an act of Congress,” said Leo Mariani, an analyst with of MKM Partners in Samford, Connecticut. “

Gabriele Sorbara, the managing director for Equity Research at Sibert Williams Shank & Co in New York, told Upstream there did not appear to be any "logic or consumer interest" behind for Granholm’s attack on ExxonMobil and other producers.