MOSCOW (MRC) -- The U.S. Energy Secretary urged domestic oil refiners this month to not further increase exports of fuels like gasoline and diesel, adding that the Biden administration may need to consider taking action if the plants do not build inventories, said Reuters.
U.S. refiners have boosted oil product exports this month as domestic crude oil production rose and global fuel demand continued to recover. Energy Secretary Jennifer Granholm, in a letter sent Aug. 18, urged seven refiners including Valero, ExxonMobil and Chevron, to build supplies of fuels as the United States enters peak hurricane season.
"Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports," Granholm said in the letter sent to refiners, a copy of which was seen by Reuters.
High U.S. oil product exports have been a concern for the administration of President Joe Biden this summer as gasoline prices briefly hit a record of USD5 a gallon, helping drive inflation to 40-year highs. Gasoline prices have since fallen to about USD3.86 per gallon.
Federal weather forecasters have projected an above-average Atlantic hurricane season, which can be a perilous time for refineries. Still-high gasoline prices remain a threat to Biden's fellow Democrats ahead of the Nov. 8 midterm elections, when they hope to retain control of both chambers of Congress.
Granholm said the administration is talking with state officials along the East Coast, where gasoline levels are at their lowest in nearly a decade. It is putting the gasoline and heating oil reserves in the U.S. Northeast, which hold 2 MM barrels of fuel, on "active standby" for potential release, and preparing other emergency contingency actions, she said.
The administration hopes that companies will "proactively address this need" of building inventories, she said. If that does not happen, the administration "will need to consider additional federal requirements or other emergency measures," Granholm added, without providing details.
In a wide-ranging meeting with the same refiners in June, Granholm backed off a plan to ban U.S. fuel exports, but the idea has never fully left the table. Refiners have said a ban could swamp domestic markets with fuel and cause some plants to cut output, which could decrease supply and put upward pressure on prices. In addition, Northeast refiners import crude and fuels, trade that could be affected by an export ban.
As per MRC, North American chemical railcar traffic rose by 2.3% year on year to 46,132 loadings for the week ended 20 August. For this week, total U.S. weekly rail traffic was 501,548 carloads and intermodal units, up 0.1 percent compared with the same week last year. Total carloads for the week ending August 20 were 237,404 carloads, up 2.9 percent compared with the same week in 2021, while U.S. weekly intermodal volume was 264,144 containers and trailers, down 2.4 percent compared to 2021.