Biden faces pressure over US gasoline exports

President Joe Biden is facing fresh calls from allies to restrict gasoline exports, as Democrats attempt to ease voter frustration over elevated gasoline prices at a time oil companies are reporting record high profits.

US representative Ro Khanna (D-California) today introduced a bill that would ban gasoline exports whenever the domestic price over the prior seven days averages at least $3.12/USG, which was the average price in 2019. The US president would have discretion to set the "terms and conditions" of the export ban, which would not affect diesel.

The bill has almost no chance of passing, but it highlights the support among some Democrats for Biden to tap unconventional executive powers to ease prices before the midterm elections in less than two weeks. California retail regular gasoline costs an average of $5.50/USG in the week ending 24 October, an 11pc drop from two weeks prior but still higher than pre-pandemic prices that averaged $3.60/USG in 2019, according to the US Energy Information Administration (EIA).

"While Big Oil is reporting obscene profits this week, American families are struggling to afford gas at the pump," Khanna said. "These companies should not be allowed to profit by exporting gas to other countries while we struggle with increased prices here at home."

Biden has yet to publicly endorse banning refined product exports, even as US net exports of petroleum products hit a record four-week high of 4.8mn b/d at the start of the month. Administration officials in recent months have worried that those high exports could cause domestic fuel shortages, leading US energy secretary Jennifer Granholm to push refiners to rebuild domestic inventories.

The White House has yet to rule out the idea of export restrictions and said that all options remain on the table. Biden so far has primarily tried to lower gasoline prices through a record 180mn bl crude drawdown from the US Strategic Petroleum Reserve, along with pressure on the oil industry.

"My message to the American energy companies is this: You should not be using your profits to buy back stock or for dividends, not now, not while a war is raging," Biden said last week. "You should use those record-breaking profits to increase production and refining."

ExxonMobil today reported $19.7bn in profits in the third-quarter, up from $6.8bn in the year-earlier quarter, while Chevron reported $11.2bn in profits, up from $6.1bn in the year-earlier quarter. Oil industry officials have warned that limits on exports could have unintended consequences that would hurt consumers in the US and abroad.

"In the short term, it may solve a political problem," ExxonMobil chief executive Darren Woods said on an earnings call today. "But it will carry — all the policies that I've heard people talking about, the export bans in particular, windfall profit tax — those will carry significant long-term negative consequences."

US retail gasoline prices for all formulations have not been below the $3.12/USG threshold used in Khanna's bill since June 2021, according to the EIA. The average price for all gasoline formulations was $3.89/USG in the week ending 24 October.

By Chris Knight