U.S. President Joe Biden continues to look for ways to bring down the high cost of gasoline—and the latest efforts have him taking a hard look at U.S. refinery capacity.
According to White House economic advisor Cecelia Rouse who spoke to CNN in an interview on Friday, the President is looking to see what the administration can do, “whether that’s working with oil companies and refineries asking them, ‘We recognize your back capacity challenges – what can we do to help you maintain your refining capacity and bring more oil online?'”
Rouse did not elaborate on what this could entail beyond enquiring how they might be of help to the industry.
Meanwhile, the idea of effecting a windfall tax on the profits of oil and gas companies remains on the table, according to Rouse.
Refiners are running at 94.2% of their operable capacity at present, producing 10 million barrels per day of gasoline and 5 million barrels per day of distillates. Adding additional refining capacity is both a long-term endeavor and a capital-intensive one—such projects could span a decade.
So daunting is the task of building new refineries that a new one hasn’t been built in the United States since the ’70s. According to Chevron CEO Mike Wirth, there are unlikely to be any additional refineries added in the United States—ever—with companies having to commit capital today for something that wouldn’t return to shareholders for decades—at a time when the rise of the ESG movement is signaling to oil and gas companies that their products may no longer be needed that far into the future.
According to Wirth, the signals that the industry is getting are mixed.