U.S. refiners to urge White House not to ban fuel exports -sources

Cargo shipping containers are seen in a storage yard surrounded by oil storage tanks and oil refineries in Carson, California, United States, March 11, 2022. Picture taken March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan

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June 22 (Reuters) – U.S. refiners will try to convince the Biden administration not to ban fuel exports to tackle soaring gasoline prices, sources familiar with plans for a meeting on Thursday say.

The White House has called an emergency meeting with major U.S. refiners to discuss ways to bring down record pump prices that have pushed inflation to 40-year highs. The meeting follows weeks of bashing between US President Joe Biden and oil companies over who is responsible for price spikes affecting consumers around the world. Read more

In the weeks leading up to the meeting, White House officials signaled to refiners that they were considering a partial or full ban on fuel exports to help bring down the domestic price of gasoline and diesel. Read more

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US Energy Secretary Jennifer Granholm said at the White House on Wednesday that administration officials would ask why gas prices are not falling at the same time as oil prices.

Asked about the industry’s unease over a potential export ban, Granholm said Biden “is unwilling to take tools off the table, but we’re willing to listen.”

The United States is the world’s largest exporter of refined products, recently shipping a near-record 6 million barrels a day of products, including gasoline and diesel, according to federal data. The export restriction could temporarily flood the US market, driving prices down, but refiners could respond by cutting production.

Refining officials are also preparing to argue that an export ban would anger allies and lead to refining output cuts as companies lose access to crucial global markets.

“Not only will limitations or outright bans on petroleum products have the exact opposite effect to that intended – raising fuel prices instead of lowering them and jeopardizing additional refining capacity – it would hurt our allies in Latin America and Europe,” said a spokesperson for the U.S. fuel and petrochemical makers.

Mexico, Canada and Japan are among the main buyers of US refined products, and Europe has increased its purchases in recent weeks to compensate for the loss of Russian supplies following Moscow’s decision to invade Ukraine in february.

Refiners will also suggest their favorite near-term options to reduce gas prices, such as waiving summer fuel specifications designed to reduce smog, easing shipping rules that require union labor and l approval of a new renewable fuel technology, the sources said.

Biden is already asking Congress on Wednesday to pass a three-month suspension of federal gasoline and diesel taxes.

In 2015, the United States lifted a 40-year ban on crude oil exports that had been put in place to help keep the country less dependent on the Middle East. Over the past two years, the country has become a net exporter of crude oil and refined products, making it one of the most important players in global energy markets.

“If refiners aren’t allowed to export, they’ll just slow production and reduce refinery utilization,” said Bob Yawger, director of energy futures at Mizuho.

Yawger said excess products would likely be sent to inventory, which has been at multi-year lows.

“The refiners would lose money there and the refiners are not a charity,” he added.

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Reporting by Jarrett Renshaw and Laura Sanicola; Additional reporting by Nandita Bose and Trevor Hunnicutt; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.


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