US Energy Secretary urges refiners not to increase fuel exports

The US Energy Secretary this month urged domestic oil refiners not to further increase exports of fuels such as gasoline and diesel, adding that the Biden administration may have to consider taking action if the plants do not build stockpiles.

US refineries increased exports of petroleum products this month as domestic crude oil production increased and global fuel demand continued to recover. In a letter sent on August 18, Energy Secretary Jennifer Granholm urged seven refiners, including Valero, ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX), to increase fuel stocks as the US enters the peak hurricane season. "Given the historic level of US refined product exports, I again urge you to focus on building US inventories in the near term, rather than selling existing stocks and further increasing exports," Granholm said in the letter sent to refiners, a copy of which was seen by Reuters. High US exports of petroleum products were a concern for President Joe Biden's administration this summer, with gasoline prices briefly hitting a record high of $5 a gallon, helping push inflation to 40-year highs. Gasoline prices have since fallen to about $3.86 a gallon. Federal weather forecasters are predicting an above-average Atlantic hurricane season, which could be a dangerous time for refineries. Still-high gasoline prices remain a threat to Biden's fellow Democrats ahead of the November 8 midterm elections, when they hope to retain control of both houses of Congress. Granholm said the administration is talking to state officials along the East Coast, where gasoline levels are at their lowest in almost a decade. She said she has put gasoline and heating oil reserves in the northeastern US, which hold 2 million barrels of fuel, on "active hold" for a possible release and is preparing other emergency actions. The administration hopes companies will "proactively address" this need to build inventories. If that does not happen, the administration "will need to consider additional federal requirements or other emergency measures," Granholm added, but did not elaborate. In a wide-ranging meeting with the same refiners in June, Granholm backed away from a plan to ban US fuel exports, but the idea was never fully off the table. Refiners said a ban could flood domestic markets with fuel and cause some plants to cut production, which could reduce supply and put upward pressure on prices. In addition, Northeast refineries import crude oil and fuel that could be affected by an export ban. "The export issue is at best a distraction and at worst a counterproductive issue on price and supply," a source familiar with Granholm's discussions with refiners said.   Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!