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President Joe Biden on Wednesday called on U.S. oil refining companies to produce more, saying they need to help alleviate the burden of high prices on consumers.
“At a time of war – historically high refinery profit margins being passed directly onto American families are not acceptable,” the president said in a letter to oil companies including Exxon and Chevron.
“[C]ompanies must take immediate actions to increase the supply of gasoline, diesel, and other refined product,” the letter added.
Biden’s call comes as sky-high energy costs add to inflationary concerns across the economy. The national average for a gallon of gas crossed $5 over the weekend for the first time on record, according to AAA.
The national average now stands at $5.014, which is 54 cents more than a month ago, and $1.94 more than last year.
Biden said that his administration is prepared to use “all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term.”
Refining capacity has dropped since the pandemic took hold, which is a factor in the rapid advance of fuel prices. Demand has returned as economies restart and people travel once again, but supply remains tight.
Loss of Russian refined products has exacerbated the imbalance, with Europe now looking elsewhere for fuel.
Refiners can’t just ramp up output, and utilization rates are already above 90%.