U.S. Refiners may Face Consequences if they Fail to Build Inventories
Jennifer Granholm has called for oil refiners in the United States to hold off for the rest of the month on exporting gasoline and diesel.
Jennifer Granholm, the United States Energy Secretary, has called for oil refiners in the United States to hold off for the rest of the month on exporting gasoline and diesel. If plants fail to build inventories and continue to increase exports, the White House may consider taking action against the plants in question. Oil exports have been boosted this month specifically within the United States with domestic production rising and global demand also recovering.
Refiners such as ExxonMobil, Chevron, and Valero, have all been warned to ease exports and to build up domestic supplies as the United States is entering hurricane season followed by the winter months.
"Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports.”
Jennifer Granholm said in her letter sent to the refiners on August 18th.
As gas prices edged over $5/gal at one point, the exports of United States oil products became a major concern for President Biden. Prices since then have fallen to below $4 ($3.86/gal). Weather forecasters have projected “above-average” Atlantic hurricanes this season which tends to be a perilous time for refineries.
State officials along the East Coast have been added to the discussions with the White House, according to Jennifer Granholm. In the Northeast portion of the United States, gas and heating oil reserves have been on an “active standby.” The wish of the Biden administration moving forward is that refineries will “proactively address the need of building inventories.” If the wish is to be fulfilled, the Biden administration will then “need to consider additional federal requirements or other emergency measures."
In response to the letter, refineries in the United States have claimed a ban on exports — which was up for discussion at a refinery meeting in June — would swamp the domestic markets and cause plants to cut output. This would ultimately lead to a cut in supply and add needed, upward pressure, on gasoline prices. According to sources familiar with the refineries, "The export talk is at best a distraction; at worst, counterproductive to price and supply.”