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WaPo: Investor response to Biden’s anti-oil policies

June 22, 2022

By Paul Homewood


And here’s the oil industry’s view on refinery capacity:




Yes, we know. So does the White House and Joe Biden, who deliberately set those signals and might have even bragged about their results, had his fantasy energy ambitions come true. Instead, Biden’s blathering about corporate greed, while even normally sympathetic media outlets like the Washington Post are putting two and two together:

The futility of the White House effort came through in the response to letters President Biden sent this week to the nation’s major oil companies, chastising them for squeezing “historically high profit margins” out of their refineries. “At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” Biden wrote. Biden threatened to invoke emergency powers if the companies don’t bring prices down.

The companies are unmoved. The profits follow years of heavy losses at many facilities after demand plunged during the pandemic. Unpredictable shifts in oil markets had created a challenging business climate before that. Even at this moment of windfall refinery earnings, when the profit margin on each barrel of oil processed has jumped from a dollar or two a year ago to as much as $18 today, investors are hardly jumping at the opportunity to enter the sector. They fear the profits are short lived. The administration’s environmental priorities — as well as rising public and corporate concern about climate change — would make many refineries obsolete in the not-too-distant future.

Building and upgrading the mammoth structures is a messy, expensive undertaking that can drag on longer than a decade, strain the finances of even the biggest fossil fuel giants and run the risk of getting abandoned before that investment is returned. …

The last major refinery to come online in the United States, in 1977, is the one owned by Marathon Oil in Garyville, La. It is capable of pumping out 578,000 barrels per day. Since it opened, more than half the refineries in the United States have closed.

And why is that? And why haven’t we built more refineries? It’s not because the demand for gasoline has slaked off over the last 45 years, certainly. It’s because environmental activists have demanded more and more restrictions, with much higher costs, for building new refineries. Both Barack Obama and Joe Biden have amplified that hostility into regulatory policy. Joe Biden got elected while declaring that he’d block any new drilling, shut down pipeline construction to refineries, and start shutting down the oil and gas industries altogether.

Would you invest any serious long-term capital into the oil and gas industry in that political environment? Of course not, especially after Biden made good on his campaign promises in his Executive Order 13990. If the oil and gas companies are “unmoved” by the potential demand, it’s because policies and regulation like this make it clear that any investment in expansion for fossil-fuel production and refining will end up getting destroyed. And deliberately so, as Energy Secretary Jennifer Granholm admitted last week on CNN:

BERMAN: Do you want – do you want – do you — five years from now, ten years from now, are you telling me you want them drilling for more oil, you want the refineries putting out more gasoline in five or ten years?

GRANHOLM: What we’re saying is today we need that supply increased. Of course, in five or ten years – actually, in the immediate, we are also pressing on the accelerator, if you will, to move toward clean energy so that we don’t have to be under the thumb of petro dictators like Putin or at the whim of the volatility of fossil fuels.

Ultimately, America will be most secure when we can rely upon our own clean, domestic production of energy through solar, through wind, through –

BERMAN: But that’s the problem for these companies. These companies are saying, you know, you’re asking me to do more now, invest more now, when, in fact, five or ten years from now we don’t think that demand will there be [sic]. And the administration doesn’t even necessarily want it to be there.

Small wonder that they’re putting profits back into the companies via stock buybacks, when they’re not just paying out dividends. No one will sink money into building a new refinery when it will take the better part of a decade just to jump through the regulatory and environmental hoops erected by Biden, all while Biden and his successors keep fighting to end the entire industry.

By the way, the oil and gas industry does have a plan to revitalize and expand their ability to deliver gasoline. The American Petroleum Institute, the industry’s interest-group non-profit, released a ten-point plan that would allow for much higher capital commitments to extraction and refining, as well as support for a comprehensive all-in energy policy that includes renewables. In case anyone wants to keep asking, “where’s your plan?”, well, here it is:

Given global circumstances, it is time for an energy awakening – for the natural gas and oil supply chain and the government at all levels to open a new era of working together to ensure that essential energy resources are unlocked; to encourage investment opportunities and accelerate infrastructure development; and to strengthen global energy security, affordability and reliability.

Bottom line: Washington policymakers must confront the global mismatch between demand and supply that has driven higher fuel prices by supporting greater U.S. production. To address the growing crisis we face, Congress and the President must support energy investment, create new access and keep regulation from unnecessarily restricting energy growth. The world is calling out for energy leadership. America can and should step up fast.

Will Biden and Granholm act to support this? Not on your life.

  1. Phoenix44 permalink
    June 22, 2022 9:17 am

    The shortage and cost of US refinery capacity has been known for decades but successive administrations simply ignored the issue. Now it’s finally a big problem they blame everyone but themselves. Businesses can cope with relationships until they can’t. Then investment stops. Then production stops and prices rocket.

    • Phoenix44 permalink
      June 22, 2022 9:17 am


  2. Is it just me? permalink
    June 22, 2022 9:26 am

    The biblical stupidity of all this leads me to the inevitable conclusion it’s a deliberate, wilful policy. A policy to pull down traditional ‘western’ economies and cultures, replacing them with more citizen-unfriendly, feudal, social-credit based economies and cultures such as China. How else can you explain this buffoonery, and the ‘exemptions’ given to such countries as China? It just doesn’t stack up? Our so called ‘democracy’ has been hijacked and (collectively) we have very little time now to fight back. The good news is more and more people are waking up. The bad news is this is all been planned for a very long time and we all don’t have long now at all to push back on it. Really up to us.

    • Cheshire Red permalink
      June 22, 2022 10:42 am

      Exactly. At some point we must accept the blindingly obvious; if these policies are not accidental, and they’re not, then they can only be deliberate.

      The West is intentionally being structurally dismantled from without and, disgracefully, from within. Step by step, slice by slice. Energy is the big driver of everything we do. Without it our societies don’t function. It really is the control knob for everything, hence it’s being mercilessly targeted and is central to controlling the UK.

      Our own parliament has spent 40 years diminishing itself. Our laws were transferred to and traduced by the EU. Brexit was an unexpected fly in the ointment, but look at how our ruling classes have responded. They’ve continued as if it hadn’t happened. They’ve neutered it by refusing to implement almost all key advantages (looser regulations, lower taxes, exclusive thresholds, lower corporation tax and so on) and by binding UK into EU-compliant non-regression clauses and ‘international treaties’.

      They made the EU-UK trade agreement conditional on UK retaining those T & C’s. Result; May and Johnson’s UK governments have bound the hands of all future governments without technically binding the hands of all future governments. Legally very neat. Morally repugnant and in my eyes straight-up treason.

      This assessment can no longer be in serious doubt, as it’s based squarely on actual observations, unfolding right in front of our eyes.

      • Gamecock permalink
        June 22, 2022 11:16 am

        Agreed, Red. The Left, having supported BLM riots, defund the police, and Tranny World, should no longer be viewed as bumbling idiots mucking things up.

        They are deliberately destructive.

  3. NeilC permalink
    June 22, 2022 9:59 am

    Everyone, I think, agrees climate is an accumulation of long term weather. So how come western governments think they can change the climate when they know they can’t change the weather.

  4. June 22, 2022 10:01 am

    Its always 5/10 years off, when everything is golden and wonderful with wind and solar and erm well something else. We just need to get through this difficult period , and the next one, and the one after that……
    This administration is going to go for broke I fear. They would rather crater the economy than admit they are wrong. Ditto with their plans to federalise all public health. They , probably correctly, think if they don’t get there before 2024 they will have lost the chance, possibly for ever.
    I hesitate to think what is going to happen to the voting at the midterms. but their demonising of Trump will play directly into DeSantis hands and he could walk into the WH in 2024. A double term of DeSantis could put paid to this green blob madness for decades.

    • Robert Christopher permalink
      June 22, 2022 10:53 am

      Without sorting out the 2020 election rigging, there’s no way any future state or federal election will generate democratic results.

      Durham has everything, but it has been a long wait.

      • Gamecock permalink
        June 22, 2022 11:13 am

        When you cheat on an exam, you must be careful to not get everything right, as it will appear you were cheating.

        Biden getting 81,000,000 votes was a failure of the Democrats to limit their cheating.

        I will say, Mr Christopher, that some states have taken action to tighten up their voting processes, so I expect some improvement in 2022.

        But in some states, like California, cheating is not a bug, it is a feature.

  5. June 22, 2022 10:08 am

    For the sake of the USA and thus the UK I do hope the De Santis prophecy is fulfilled

  6. ThinkingScientist permalink
    June 22, 2022 10:51 am

    Meanwhile even here in the UK I have been asked as a member to vote to change the name of the Petroleum Exploration Society of Great Britain (PESGB) because….the “Energy Transition”. Go form your own society is my view – PESGB has been going 60+ years and has a lot of oil and gas working professionals as its membership. But the rot is set in now.

    The GeolSoc already renamed its Petroleum Group the Energy Group. Too late – and the GeolSoc is totally Climate fruitcake.

    The UK North Sea government oversight organisation the Oil and Gas Authority (OGA) was only formed in 2015, a breath of fresh air to revitalise the North Sea, make data more available etc. Renamed March 2022 as the North Sea Transition Authority.

    Meanwhile the oil industry work is elsewhere, eg Namibia where I just returned from a conference run by the AAPG. Good technical papers, lots of interest. And where the government department is still called the Ministry of Mines and Energy. Not an energy transition or windmill peddler in sight.

    In 2014 brent crude oil prices went off a cliff from about $108 falling by the end of 2015 to $37. That period saw 135,000 UK oil sector jobs disappear, largely in Aberdeen. The oil price recovered somewhat in 2018 to $80 before finally bottoming in Mar 2020 at $ the pandemic kicked in.

    Overall the oil industry has shed 60-70% of its professional workforce since 2014. The turnover for my small company employing a handful of people has dropped 70% and never recovered and our staff gone from 12 to 4.

    The message from government and climate doomsters is clear – they want to shut us down and kill our jobs. Well don’t come crying to me when the queues for fuel start, the prices go through the roof, people die in winter because they cannot afford to heat their homes and, potentially, the lights go out. You brought it on yourselves.

    Supply and demand. Its pretty simple. Demand > supply, prices go up.

    • Carnot permalink
      June 22, 2022 2:09 pm

      You are not alone. For 4 decades I was a member of the Insitute of Petroleum, that around 2014 ( I cannot remember the exact date) merged the the Institute of Energy that later morphed into the Energy Institute( petroleum was extinguished). In 2020, as the subs went up year after year and the monthly magazine became I thinner by each month, I quit. What was the point and I can live without letters after my name – so what.
      In 1978 the UK had 16 refineries of varying quality. The weaker ones shut in the 1980’s and now, as of 2022 we have 6 remaining of which 4 have had partial capacity reductions. All are old.
      The good work of the ESG brigade and the EDI battalions have just about poisoned the atmosphere such that young SMART people are no longer attracted to the oil and petrochemical industries. In the company that I work for our Human Remains department has done a great job on recruiting. We now have EDI looming large, that along with nepotism, has created some of the dimmest employees known to mankind. They may have degrees but what the hell did they learn. Just to add insult, the Human Remains cretin that oversees me is now harping on about well being and pride month. Business is secondary.

      The ESG/ EDI cancer is rife amongst the west and we will soon be approaching a period whereby our fuel supplies will be offshored, to the ME, China and India. It is happening right before our eyes and our dim politicians constantly castigate the remaining oil refiners for profiteering. Windfall taxes are the answer.

      That the oil producers and refiners have made a profit should not be seen as profiteering as for many years they have barely made any money. Look at their share prices and dividends. Windfall taxes are not going to encourage the oil co’s or investors ( PENSIONS) to invest.

      In 2019 and early 2020 I was reguarly speaking at conferences and warned of an impending pinch in crude supply and refining capacity. How right I was and at the time all I heard was the shrill of renewables.

      Diesel cars are probably finished, but diesel trucks and non road vehicles are going to be around for a very long time and all the BS on renewables will suddenly blow up to reveal that they are the next boondoggle. Renewable diesel and SAF are merely hydrogenated vegetable oils that even if all the vegetable oils grown globally were utilised they would only supply <10% of the global demand for middle distillates.

      Moroever the demand for raw materials ( steel, concrete, metals and petrochemicals) will continue to grow and this is going to stress test supply lines for years to come. Meanwhile reource quality continues to decline as the "Best use first pricniple" looms large.

      I despair at how we are dictated to by inept, clueless and corrupt so called politicians and their advisors.

      • June 22, 2022 10:06 pm

        Thanks for the heartfelt cry to the heavens.

  7. June 22, 2022 12:15 pm

    The West Virginia State Treasurer, Riley Moore, has been working on this policy for some time since his election in 2020. He announced it from the Governor’s Office on June 17:

    “The state Treasurer’s Office has sent letters to six of America’s largest investment companies, warning that they may be ineligible for some West Virginia contracts over their environmental policies.

    The letters were sent to BlackRock Inc., Goldman Sachs, JPMorgan Chase, Morgan Stanley, U.S. Bancorp and Wells Fargo. MetroNews and other news organizations got the letters through public records requests.

    The warnings came about after this year’s passage of Senate Bill 262, directing the Treasurer to keep a list of financial institutions that steer clear of investments in fossil fuel companies, possibly resulting in decisions to withhold state deposits from those bankers.

    “Earlier this year our office proposed, and the Legislature passed, Senate Bill 262 to push back against unfair discrimination against our coal, oil and natural gas industries by the financial sector as part of the so-called ‘environmental, social and governance’ or ‘ESG’ investing movement,” Moore stated earlier this week. “We’ve now demonstrated we are serious about enforcing this law.”

    The law and the letters give each company 30 days to respond and provide “information demonstrating that it is not engaged in a boycott of energy companies.” The letters warn that each company may be rendered “ineligible to enter into, or remain in, banking contracts with the State of West Virginia.”

    “A financial institution placed on the Restricted Financial Institution List will be removed from said list if the financial institution ceases to engage in activities that boycott energy companies and provides information to the WVSTO, in writing, demonstrating that it has ceased all such activity.”

    • June 22, 2022 12:23 pm

      On January 18, 2022, Treasurer Moore singled out Black Rock with the following statement: “West Virginia Republican Treasurer Riley Moore announced Monday the state’s Board of Treasury Investments would no longer be working with BlackRock for banking transactions over the investment firm’s animosity towards fossil fuels and friendliness with Communist China.”

      West Virginia now has a Treasurer, Auditor, Secretary of State, Commissioner of Agriculture and Attorney General who are kicking butt. I never thought I would live to see this day.

      • bobn permalink
        June 22, 2022 2:11 pm

        A little slice of good news of sanity there joan; among the general insanity of the politicians, media and fellow eco fruitcakes.

  8. It doesn't add up... permalink
    June 22, 2022 1:26 pm

    This should be a top quality discussion:

    John Constable produced a very impressive performance at the Lords Select Committee some months ago, and Kathryn Porter really knows her stuff too – as readers of her blog will know. Harry Wilkinson has also done some good media slots. Expect accurate assessments, and no flannel.

  9. Beagle permalink
    June 22, 2022 2:08 pm

    There is no way people, here in the UK, are eager to dump their gas boilers and ICE cars. It seems the energy supplies are being deliberately restricted to try and force the issue. People are carrying on ‘as normal’ and I can see in 2 or 3 years the politicians are going to come across a lot of opposition when they try to impose their ridiculous ideas on the general population.

    • chriskshaw permalink
      June 22, 2022 4:02 pm

      I hate to be a pessimist but i somehow got on a link to Alex Epstein on Facebook. I am not a fan nor a user of FB but was happy enough to read what Alex had to say… but i ended up reading the comments. Hundreds of libtard morons spouting sh1t that Alex had just debunked. There is literally not critical thinking going on, no comprehension of what Alex was saying, and the only solutions were, you guessed, solar/wind or we’re all gonna die. Quite disturbing.

    • June 22, 2022 10:05 pm

      In 2000 when diesel hit 80p a litre the fuel protests kicked in.

      It’s 2022, and a couple of days ago I saw unleaded at 195.9p, swore, went all the way around the roundabout and managed to find it for 10p less down the road. Where are the fuel protests? Where are the go-slows?

      • June 23, 2022 9:53 am

        Perhaps we are following the example of the frog and the slowly heating hot water? 22 years ago is pre-historic history to those who get all their infotrmation from social media.

      • Sapper2 permalink
        June 23, 2022 12:14 pm

        To Jit, it will come.

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