US clashes with ExxonMobil over fuel inventories

President Joe Biden and his deputies are trading barbs with ExxonMobil and other refiners over what the administration sees as inflated gasoline prices caused by insufficient domestic inventories.

US energy secretary Jennifer Granholm today offered a fresh critique of the oil sector's profit margins and the alleged "failure of companies to maintain sufficient regional inventories." Her remarks came in response to the leak of a letter in which ExxonMobil chief executive Darren Woods pushed back on her earlier request for the industry to focus on rebuilding domestic fuel inventories, rather than increasing fuel exports.

"This week's letter from a company that made nearly $200mn in profit every single day last quarter, misreads the moment we are in," Granholm said. "The fact is this: Energy companies are making record profits, with refiners and retailers posting margins that are well above average."

The latest tiff with ExxonMobil arose after Granholm wrote to a group of refiners on 18 August urging them to focus on rebuilding domestic inventories of gasoline and diesel before the approaching peak of the hurricane season. If companies did not do so, she said the administration would consider additional federal requirements or emergency measures.

But industry officials contend that US fuel inventories are adequate to meet demand. In a 26 September letter, Woods said Granholm's request for the sector to focus on rebuilding inventories and limit exports would not resolve supply concerns in the northeast US, since pipelines from the US Gulf coast are already operating at full capacity.

"Banning US product exports will lead to higher prices for consumers and ultimately lower supply," Woods said. "Free market incentives remain the most efficient way for the industry to address these problems."

In response, Granholm said if companies such as ExxonMobil continue to believe in free market incentives, "they need to step up and show results for American consumers and the American economy." US energy companies should take action now to rebuild fuel inventories and lower prices for consumers, she said.

Biden and his cabinet members have previously singled out ExxonMobil for criticism in relation to high fuel prices. Biden this summer faulted the company for making "more money than God" at a time when US retail regular gasoline was nearing a record-high price of $5/USG.

A group of oil company officials separately met today with US Energy Department officials to discuss gasoline and diesel prices, the White House said. Earlier this week, Biden urged the oil industry not to use recent hurricanes that made landfall in the US as new justification to increase prices.

"If gas station companies try to use this storm to raise prices, I'm going to ask officials to look into whether or not price gouging is going on," Biden said.

US retail regular gasoline in the week ended 26 September rose by 6¢/USG to $3.83/USG, the first weekly increase since mid-June when prices hit a record $5/USG. Granholm, in her letter, said refiners and retailers are posting margins that are "well above average" and passing along those costs to consumers through higher prices.

By Chris Knight