Guest “Bring it on Brandon!” by David Middleton
Published June 15
Biden threatens oil companies with ’emergency powers’ if they don’t boost supply amid inflation spike
Biden says oil companies are earning ‘historically high’ profitsBiden’s statement blames oil companies for running “historically high profit margins” even as Americans experience surging gas prices. Biden has recently faced criticism for a lack of executive action aimed at curbing inflation.
“There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden wrote. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”
“Your companies and others have an opportunity to take immediate actions to increase the supply of gasoline, diesel and other refined product you are producing,” he continued. “My 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, and to ensure that every region of this country is appropriately supplied.”
[…]
Fox News
Everything this idiot has done since occupying the White House has made it more difficult for oil companies to explore for oil & gas, lease acreage, drill wells and produce, transport and refine petroleum products. And he has the temerity to demand an increase in production?
Rather than writing flatulent letters, maybe he could have checked with the Energy Information Administration (EIA).
JUNE 10, 2022
EIA expects high refinery margins to contribute to increasing fuel production this summerIn our June 2022 Short-Term Energy Outlook (STEO), we forecast that U.S. refinery utilization will be relatively high this summer in response to strong wholesale prices for petroleum products, such as diesel and gasoline, which have increased more than the price of the crude oil used to make them.
The price difference between the price of crude oil and the wholesale price of a refined petroleum product reflects the value of refining crude oil. This difference, known as the crack spread, can indicate refining margins and profitability. Crack spreads for both diesel and gasoline increased in the first several months of 2022.
Gasoline and diesel prices and crack spreads are well above historical averages in response to several factors including:
•Low inventories for both petroleum products in the United States and globally
•Fuel demand increases to near pre-pandemic levels
•Relatively low refinery production of both fuels compared with pre-pandemic levels
•Reduced petroleum product exports from Russia
In response to these high prices, we expect that refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain. We expect refinery utilization to average 96% in June, 94% in July, and 96% in August.
We estimate U.S. refinery inputs will average 16.7 million b/d during the second and third quarters of 2022. This average is lower than the 2019 refinery inputs average of 17.3 million b/d despite high utilization rates because of reductions in refinery capacity since early 2020. U.S. refinery capacity has fallen by almost 1.0 million b/d since early 2020 because several refineries were closed or converted.
We expect wholesale prices for gasoline and diesel will begin decreasing in the third quarter of 2022, as refinery production increases. Despite our forecast price decline, we expect that wholesale fuel prices will remain well above previous years through the summer, based on higher crude oil prices as well as the ongoing impact of low global inventories. Low international inventories are likely to face additional tightness in response to the recently announced European ban on Russia’s energy imports.
Principal contributors: Kevin Hack
EIA
Back during the Shamdemic, the demand for oil and refined products collapsed. This caused prices to collapse, which caused a deep reduction in production. It also lead to the closure of 6 refineries.
The number of operable refineries in the United States (excluding U.S. territories), which includes both idle and operating refineries was 129 at the beginning of 2021, down from 135 at the beginning of 2020.
In 2019, the 335,000 b/cd Philadelphia Energy Solutions (PES) refinery in Philadelphia, Pennsylvania, experienced a major refinery incident that led to the refinery’s closure. Because the decision to permanently close the facility was still pending as of January 1, 2020, the facility was listed as idle in the 2020 Refinery Capacity Report. As of January 1, 2021, the refinery is considered closed and is not included in the 2021 report.
The additional refinery closures in the 2021 Refinery Capacity Report largely reflect the impact of COVID-19 on the U.S. refining sector (Figure 2). In 2020, the pandemic contributed to a substantial decrease in demand for motor fuels and refined petroleum products, which put downward pressure on refinery margins and made market conditions more challenging for refinery operators. Challenging market conditions, increasing market interest in renewable diesel production, and pre-existing plans to scale down or reconfigure petroleum refineries all contributed to the closing of a handful of refineries in 2020. We removed the following refineries from total U.S. operable capacity following their announced closures:
•The Western Refining refinery in Gallup, New Mexico: 27,000 b/cd
•The Tesoro (Marathon) refinery in Martinez, California: 161,000 b/cd
•The Dakota Prairie refinery in Dickinson, North Dakota: 19,000 b/cd
•The HollyFrontier refinery in Cheyenne, Wyoming: 48,000 b/cd
•The Shell refinery in Convent, Louisiana: 211,146 b/cd
EIA
Several refineries were also converted to “renewable” diesel production:
Renewable diesel has been increasingly used to meet California’s Low Carbon Fuel Standard (LCFS), Oregon’s Clean Fuels Program (CFP), and EPA’s RFS. Blender tax credits and government subsidies related to California’s LCFS and, to a lesser degree, Oregon’s CFP have encouraged several former petroleum refineries—such as Marathon’s Martinez, California refinery and Phillips 66’s Rodeo Renewed project in San Francisco, California—to convert their refineries into renewable diesel facilities. These projects, in addition to several others, would nearly triple the current 77,000 barrels per day (b/d) capacity of renewable diesel production by the end of 2023. According to data collected from various trade press sources, the United States will have 67,000 b/d of new renewable diesel capacity online by the end of 2022 and another 72,000 by the end of 2023. These estimates are based on projects that are currently under construction. Construction has not yet begun on some projects that also could come online during this time period, although we assume for our forecasts that these projects will not come online before 2024.
EIA
No amount of Brandon-blathering will bring those closed refineries back on line. There hasn’t been a new crude oil refinery built in the US since 1977. However, the EIA forecasts that the high crack spread will cause refinery utilization rate to climb from the current ~91% to ~96% by this summer, resulting in the crack spread dropping back to roughly where it was before the Shamdemic.
Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO), June 2022
Unfortunately for Brandon, this will probably not happen before November.
This just in… ExxonMobil fires back (H/T CTM)
ExxonMobil statement regarding President Biden Letter to Oil Industry
June 15, 2022 02:46 PM Eastern Daylight Time
IRVING, Texas–(BUSINESS WIRE)–ExxonMobil today released the following statement in response to a letter from President Biden.
We have been in regular contact with the administration to update the President and his staff on how ExxonMobil has been investing more than any other company to develop U.S. oil and gas supplies. This includes investments in the U.S. of more than $50 billion over the past five years, resulting in an almost 50% increase in our U.S. production of oil during this period.
Globally, we’ve invested double what we’ve earned over the past five years — $118 billion on new oil and gas supplies compared to net income of $55 billion. This is a reflection of the company’s long-term growth strategy, and our commitment to continuously invest to meet society’s demand for our products.
Specific to refining capacity in the U.S., we’ve been investing through the downturn to increase refining capacity to process U.S. light crude by about 250,000 barrels per day – the equivalent of adding a new medium-sized refinery. We kept investing even during the pandemic, when we lost more than $20 billion and had to borrow more than $30 billion to maintain investment to increase capacity to be ready for post-pandemic demand.
In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions — such as waivers of Jones Act provisions and some fuel specifications to increase supplies. Longer term, government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines.
About ExxonMobil
ExxonMobil, one of the largest publicly traded international energy and petrochemical companies, creates solutions that improve quality of life and meet society’s evolving needs.
The corporation’s primary businesses – Upstream, Product Solutions and Low Carbon Solutions – provide products that enable modern life, including energy, chemicals, lubricants, and lower-emissions technologies. ExxonMobil holds an industry-leading portfolio of resources, and is one of the largest integrated fuels, lubricants and chemical companies in the world. To learn more, visit exxonmobil.com and the Energy Factor.
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This has nothing to do with more oil production. This is a political gesture designed to enable Biden to blame big oil and their profits for Biden’s own disastrous actions. If he really wanted more production, he’d change his own policies. He promised to “end fossil fuels”, and thus is him doing it.
That picture, I’m sure I’ve seen that guy before (OK, I know it’s actually Maduro.) Is it
this guy? OMG, Saddam Hussein is alive and living in Venezuela.
He is like a drunk in the middle of the street blaming the drivers for the traffic jam. Then telling them to drive on. That wouldn’t be safe in Vegas.
No one should take anything that serial liar and plagiarist Biden says seriously. He lies all the time.
Late to comments here because of other obligations yesterday. Good post.
As much as the present situation hurts many, I think there is a silver lining to a very dark cloud.
The election was stolen for Biden because the left could not stomach Trump’s successes. Biden set out do do what he and left had promised:
The results were predictable and happened rapidly. Borders overwhelmed with drug trafficking up. Energy inflation. Food inflation. Markets down hurting retirement saving. Fed reaction to inflation causing a looming recession.
The silver lining is the resulting red wave coming in November 2022. I foresee a Dem wipeout greater than 2010. And likely carryover to 2024. Biden is incapable of running, but says will try. The Dems have nobody else—Kamala and Mayor Pete?!?
Ergo, somebody representing MAGA will sit in the Oval Jan 20, 2025 and this nightmare will end.
The fact that Biden was the only candidate the Democrats were able to dig up in order to stop Biden absolutely beggars belief.
Prominent Democrats are already making noises about how Biden can’t run again in 2024. If he doesn’t, who will replace him? The only prominent Democrat with experience running for President and with a substantial coalition behind him is Sanders. If the Democrats pull the rug out from under Sanders for the third time in a row, what are the odds that the far left jumps ship for a new party? Say the Green Party? Or maybe form a new party, something like Social Democrats? Or maybe openly own their philosophy, the Communist Party.
In order to stop Sanders, not Biden. More coffee before posting.
Rud, a few things:
1) I prefer boarders to border-jumpers.
2) I’m afraid the MAGA brand is tarnished with regular folks (although I like it).
3) An old white-bread Republican against a photogenic Democrat like Newsome is problematic in 2024. A viable stable of Democratic contenders will emerge.
4) I’m convinced that Kamala and Pete won’t make it past the early primaries.
5) About the only nationally recognized charismatic Republican on the horizon is DeSantis. The media is already trying to destroy him and it will only get worse as 2024 approaches.
6) The enduring widespread animosity towards Donald Trump and media bias would militate against his rerun.
In the end, though, I have no idea what the future holds for our Republic. Buy gold and ammunition is my cynical advice.
Already got the ammo and agree with you on gold or even silver.
Don’t see viable democrat presidential candidates that you apparently do. It is obvious that they want Abrams to win in GA to be a potential. Fat black woman that she is.
Don’t agree that Trump is done either. But if DeSantis ran I suspect he would it would be a toss up between him and Trump. As for others? Keep an eye on this guy: Mark Robinson | Lieutenant Governor (nc.gov)
Great speaker.
The Pences and Haleys and other RINOS of this world are not going anywhere IMO. And that includes Nome btw. That is a great thing that MAGA has done that is not really recognized I think. Exposed the RINOS for who they are. I have based that judgement on the record of Trump endorsed candidates in the primaries so far.
One thing is for sure. It will be nice to not have a Cheney in office after this election.
Don’t see viable democrat presidential candidates that you apparently do.
I hear some loons floated Harris/Buttigeg last week – said they would “demolish” DeSantis
Who ever said I didn’t think Joe Brandon couldn’t get any dumber????
Eco-greenies terrorize Americans yet again.
Environmental groups sue Biden to block oil and gas drilling permits (cnbc.com)
I’m sure that the Biden administration actually supports this effort to block drilling permits.
The old sue-and-settle Leftist trick.
Almost 700 oil refineries as of January 2020, but as a result on continuous over regulations and permitting delays and the worldwide support of the Environmental, Social, and Governance (ESG) to divest in fossil fuels, the right operating model and level of integration will be crucial for survival and sustained profitability of refineries. Consequently, one in five oil refineries are expected to cease operations over the next five years.
I wouldn’t bet on that. Reality will triumph over Leftist fantasies.
If Biden really wanted to ease inflationary pressure and fuel prices, he would close the border to illegals. There is a direct causative correlation between population growth and consumption. More people, more consumer demand.
Giggle @ur momisugly crack spread …
So Biden says that Putin, the leader of a backwards second rate country mainly consisting of snow and drunks, can easily hurt the American people. Quite a roundabound way of resigning there Joe. ..
He really seems to believe that blaming others will save his skin. Politics doesn’t work that way: Voters think that the guy nominally in charge (even if he is blameless) is responsible for good or bad outcomes. Look at Covid and President Trump. What goes around comes around.
They have dusted off the guidebooks on Presidential jawboning from the Kennedy years.
I recall that when Jimmy Carter did it, there were Biblical references to “the jawbone of an ass”.
Seems to still fit the situation.
And now, as he was cutting out for more vacation time, “Joe Biden Says He is Unpopular Because Americans Are Mentally Unwell”:
https://www.thegatewaypundit.com/2022/06/joe-biden-says-unpopular-americans-mentally-unwell/
Calling Jimmy Carter. Send in the rapid rabbit or Billy Beer.
Brandon has the world’s largest “L” on his forehead.
The Demonrats need someone with youth and stamina. Time for Jimmy to finally make his comeback.
Almost like there’s a malaise out there, eh Brandon?
Biden is like the guy playing bridge who, with a full house of spades, bids ‘No Trumps’ – and can’t see where he went wrong.
This administration is acting like how North Korea does farming. Enforces rules and procedures that drastically reduce crop production, while demanding they increase production.
“We can’t plant rice that close together. It stunts the growth and less rice per paddy is produced.” “You WILL plant rice closer together! It’s the only way to grow more rice! How dumb can you be, stupid farmer.”
What’s worse is North Korea has been doing that same thing since the end of WW2. Those in charge firmly believe that their ideology and what they feel about things overcomes reality, despite 77 years of it being so obviously wrong.
Read “A River in Darkness: One Man’s Escape from North Korea” by Masaji Ishikawa. During and after WW2 many Japanese men had taken (often literally) Korean wives. They, their wives, and their children were treated badly by other Japanese. The North Korean communists came around, offering free housing, land, education etc in “Korea”. They didn’t bother to mention they were communists and the offer was a free boat ride to North Korea, the “free house” was usually a falling down shack and the “education” for their children was communist indoctrination. Masaji Ishikawa was a young boy then and was assigned to work on a rice plantation. when he began planting the rice the proper way he was told to place them closer together. When he said that was stupid, it would reduce production, every kid in Japan knows that, he was told to just follow orders and plant how he was told.
Eventually he was assigned a job driving a tractor. Finding his way from place to place was a problem because in NK all roads are military roads and everything military is Top Secret, so asking anyone “How do I get to this village?” might get one arrested for being a spy.
It took him 30 years to get out of North Korea, after having his first wife die (IIRC some of his children also died) and as of the time the book was written he didn’t know the fate of his second wife or any of his other family. The only reason China didn’t toss him right back across the Yalu River was because he was half Japanese and China was for some reason willing to send Japanese and half Japanese escapees from North Korea to Japan.
When the government takes 100% of the pitiful amount of rice their idiotic policies allow to be raised, and you’re forced to denuding the countryside of all grass and weeds to cook and eat, when you heard loud noises in the night from the shack next door, and the next morning the neighbors are gone and nobody acknowledges they were ever there, you’ll do anything it takes to get the heck out.
The jig is up stupid.
Calling all trolls to the barricades…..leave time is cancelled
Biden approval rating at 39% amid economic fears; 47% ‘strongly disapprove’: USA TODAY/Suffolk poll (yahoo.com)
The only thing I will disagree with in this post and with several posters here is that this is due to incompetence or stupidity.
Granted Brandon has never been the sharpest pencil in the box and on top of that is senile with his cognitive ability compromised considerably. But Brandon is the disposable puppet and the moves he makes are being controlled by others.
It is stupid, but it is planned and coordinated to achieve the results and ends the puppet masters desire.
Seems you could have a point-
‘Morally bankrupt’: Biden ‘humilitaed’ by Saudi Arabia and oil companies | The Weekly Times (weeklytimesnow.com.au)
Great post David, thanks.
Strikes me the gov’t is creating the fuel emergency and wants then to blame it on the fossil fuel producers in order to justify nationalizing them. If other gov’ts do the same multinational oil companies become the economic bedrock of the dream, the one-world-government.