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U.S. oil companies continue to enjoy record profits as millions of Americans suffer from record-high gas prices. On Wednesday, President Biden called on oil refiners to invest those profits into ramping up production of gas and diesel.
Biden and Democrats have blamed record-high inflation and gas prices on Russia’s war against Ukraine, while Republicans place blame on Democratic spending policies. Meanwhile, millions of low-income Americans must choose between paying rent, gas, or food.
“The crunch that families are facing deserves immediate action,” the president wrote in a letter to major oil refiners, the Associated Press reported. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”
Nationally, gas prices are averaging $5 a gallon, according to AAA, and those in poverty or low-income jobs face the brunt of the economic whirlwind. Making matters worse, the government reported on Friday that consumer prices jumped 8.6% from a year ago, an increase not seen in 40 years.
Oil prices surge amidst record inflation, Russia’s war against Ukraine
Notably, countries around the world, including the U.S., moved to cut off imports of Russian oil in a series of sanctions after President Putin invaded Ukraine. As U.S. oil companies enjoy record profits, Biden has claimed companies like ExxonMobil “made more money than God this year.”
Some oil companies have already indicated their plans to invest their excess profits into ramping up production, but Biden’s letter calls them out in no uncertain terms.
“There is no question that (Russian President) Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden said in his letter. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.
In his letter, Biden highlighted the fact that gas prices were averaging $4.25 per gallon the last time the cost of a barrel of oil was last near the March price of $120. With gas prices averaging 75 cents higher, Biden is blaming a lack of refinery capacity and record-high oil company profits.
In an apparent warning to the companies, Biden wrote that his administration is willing to “use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region in this country is appropriately supplied.”
Legislators disagree on how to address rising gas prices, inflation
In response to the pandemic, Trump and Biden have used the Defense Production Act to force companies to move quickly on producing vaccines and other supplies. It’s possible Biden could use it to force oil refineries to act as well.
Meanwhile, a group of Republican senators have lashed out at the Biden Administration for limiting new oil and gas drilling leases and favoring renewable energy production.
“While the Biden Administration and Members of Congress fault the domestic oil and gas industry for sitting idle on over 9,000 drilling permits and millions of acres in ‘inactive leases’, NMFS’s permitting delays represent one example of the Administration’s de facto ban on new drilling – impeding domestic oil and gas investment, exploration, and production,” a group of 20 Republican senators led by Ted Cruz (R-TX) wrote on May 18.
Emphasizing a more progressive tactic, Sen. Bernie Sanders has proposed enforcing a 95% tax on profits that went above the companies’ pre-pandemic averages. Though, that proposal would face steep hurdles in a sharply divided Congress.
For his part, Biden’s letter notes that his previous attempts to lower gas prices through releasing oil from the U.S. strategic reserve and increased ethanol blending standards haven’t worked to solve the crisis.
Nevertheless, while major media outlets frame the issue as a political problem for Democrats in Congress facing re-election in November, Americans of all backgrounds continue to struggle navigating through this new normal.