AFPM President and CEO Chet Thompson issued the following statement regarding President Biden’s suggestion that a Windfall Profit Tax should be considered to address fuel supplies and prices: “Once again, the President is more worried about political posturing before the Midterms than he is about advancing energy policies that will actually deliver for the American people."
Some policymakers are rumored to be considering a ban on crude oil and/or U.S. refined product exports. This would be a mistake. Ending U.S. crude oil or refined product exports won’t help U.S. consumers by lowering prices at pump. In fact, it could make things even worse. Let’s take a closer look at how a refined product export ban would affect gasoline and diesel supplies and, thus, prices in the United States and around the world.
Refinery utilization, measures how much crude oil refineries are processing or “running” as a percentage of their maximum capacity. It tells us roughly how much of our refining muscle is being put to work manufacturing fuel. American refineries are running full-out, at about 95% of total capacity, contributing more fuel—gasoline, diesel, jet fuel, etc.—to the global market than any other country. In fact, U.S. refineries process more crude oil every day than the United States produces, and we make more finished fuels than the United States consumes.
A Strategic Petroleum Reserve (SPR) release—which basically involves making additional barrels of crude oil available for sale to the world market—is meant to increase global supply. Meeting today’s demand with more supply is a recipe for lower prices. The United States released millions of barrels from our SPR in the past several months, as did many other countries.
The United States has the most complex and efficient refining industry in the world, but we also have less refining capacity than we used to. Where the issue of refining capacity is concerned, it’s important to understand what refining capacity is, why we’ve lost capacity in the United States and how policies can advance the competitiveness of our refineries in the global market.
All eyes are on Hurricane Ian, which is expected to approach Florida’s west coast later Wednesday and into Thursday bringing high winds and massive amounts of rain. Although our nation’s refiners and petrochemical manufacturers do not have facilities in the affected region, we’d like to urge the people in the area to prepare for the storm and heed all evacuation notices. Florida residents can get critical preparedness and evacuation information here .
“Our country has seen time and again that major storms and often-correlated runs on gas stations can have a swift impact on prices. Already in Florida, some key areas are functioning with roughly 20 percent of retail stations either out of gas or out of power. That means there is less supply overall and some temporary inability to access supplies in certain Florida communities where there is, at present, heightened local demand. The market is resilient and will work to fix this imbalance swiftly, but a return to normalcy will likely not be immediate as the supply chain is complex and buyers will need to return to their normal purchasing habits."
The American Fuel and Petrochemical Manufacturers (AFPM) President and CEO Chet Thompson and American Petroleum Institute (API) President and CEO Mike Sommers today sent a letter to U.S. Secretary of Energy Jennifer Granholm raising significant concerns that the administration could pursue a ban or limits on refined petroleum products. “Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate U.S. allies during a time of war,” Thompson and Sommers wrote.
SPR releases cannot be the center of this Administration’s strategy to confront inflation and high energy prices. At best, SPR releases are a short-term fix, they are not a solution. Stability and certainty is what global crude oil markets crave.
As we approach the 2022 hurricane season, experts are predicting yet another severe year, with some saying it will compare to last year. No one knows how accurate these predictions will be, but we can...