Morning Chronicle - Big Oil meeting with US govt cordial but no miracle gas price fix

High prices at the pump are weighing on American consumers -- and damaging President Joe Biden's approval rating.

Heading into the gathering, Energy Secretary Jennifer Granholm said she hoped the meeting would result in refiners boosting gasoline supplies to lower prices for the summer vacation driving season.

Afterwards, the Energy Department said the talks had had a "productive focus on dissecting the current global problems of supply and refining," and promised "ongoing dialogue" to "alleviate the current supply and price challenges."

Similarly, the American Petroleum Institute and American Fuel & Petrochemical Manufacturers called the meeting a "constructive discussion about ways to address rising energy costs and create more certainty for global energy markets."

Chevron, Phillips 66 and Shell all released upbeat statements, with Shell US President Gretchen Watkins praising Granholm for setting a "collaborative tone" by noting that Shell and others had shifted some refining capacity to produce biofuels.

But no practical steps to immediately boost supply were revealed.

White House press secretary Karine Jean-Pierre called the gathering a "first step."

"Clearly we want to come up with solutions," Jean-Pierre told a press briefing. "There's going to be other steps to get there."

- Uneasy ties -

Biden and the oil industry have an uneasy relationship, in part over the White House's efforts to restrict drilling in some federal areas due to environmental concerns, and decisions like canceling the Keystone pipeline project on his first day in office.

The US president has also blasted industry leaders in recent days over skyrocketing profits and their reluctance to boost capital spending.

Industry leaders released a letter to Biden ahead of Thursday's meeting that alluded to his upcoming trip to Saudi Arabia, urging him to visit US refineries and other industry sites to understand the potential for "American-made energy solutions."

But with Biden's approval ratings plunging due to soaring inflation, the president has turned to the industry for relief.

- Short-term solutions? -

Gasoline prices currently stand at $4.94 a gallon, a bit below all-time highs, but up more than 60 percent from the year-ago level.

In a letter earlier this month to oil giants, Biden said high fuel prices were a key factor in the "intense financial pain the American people and their families are bearing."

He urged ExxonMobil, Chevron and other industry players to "provide concrete, near-term solutions that address the crisis."

In response, Chevron Chief Executive Mike Wirth pledged to work with the administration, but faulted Biden's comments that "at times vilify" the industry -- drawing a Biden quip that Wirth was being "mildly sensitive."

The price surge follows Russia's invasion of Ukraine, which exacerbated an already tight energy supply situation, sending crude oil prices sharply higher.

The rise in prices also reflects the diminished state of refining capacity after the industry mothballed some plants during Covid-19 lockdowns, and did not reopen them amid uncertain long-term growth prospects with the buildup of electric vehicles.

Biden's policy thus far has centered on a huge increase in crude oil from the Strategic Petroleum Reserve.

On Wednesday, the US president proposed a temporary fuel tax break, a measure that received a lukewarm reception on Capitol Hill.

For energy specialist Andrew Lebow of the Commodity Research Group consultancy, "there is very little refiners can do at this point."

"If they could produce more, certainly they would be given that the margins are incredible," he said.

On Wednesday, Granholm acknowledged that building new refineries could not be done overnight, but said the administration wanted answers about plants that had been taken offline.

She also wanted to talk about supply chain issues, questioning if the industry could help on that front.

Kevin Book, head of research at Clearview Energy Partners, said there were areas where the government could provide aid, such as facilitating procurement of truck drivers and sand for fracking.

Adopting a broadly constructive tone on regulation could also boost investment, he said.

J.Owen--MC-UK