The U.S. Secretary of Energy urged refiners not to boost exports of fuel

This month, the U.S. Energy Secretary asked domestic oil refiners not to expand exports of fuels such as gasoline and diesel, noting that the Biden administration may need to take action if the refineries do not develop stocks.

This month, U.S. refiners increased oil product exports as domestic crude oil production increased and global fuel demand continued to improve.

In a letter dated August 18, Energy Secretary Jennifer Granholm encouraged seven refiners, including Valero, ExxonMobil (NYSE:XOM), and Chevron (NYSE:CVX), to increase fuel supplies as the United States approaches peak hurricane season.

Granholm said in the letter to refiners, a copy of which was seen by Reuters, "given the record level of U.S. refined product exports, I urge you to focus in the immediate term on raising inventories in the United States, rather than selling down present stockpiles and further boosting exports."

High U.S. oil product exports have been a concern for President Joe Biden's administration this summer, as gasoline prices temporarily surpassed $5 per gallon, contributing to 40-year inflation highs. Since then, gasoline prices have dropped to approximately $3.86 per gallon.

Forecasters at the federal level have predicted an above-average Atlantic hurricane season, a potentially hazardous time for refineries. Prior to the midterm elections on November 8, when Democrats aim to keep control of both chambers of Congress, high fuel prices continue to pose a threat to Biden's party.

Granholm stated that the administration is speaking with East Coast state leaders, where gasoline levels are at their lowest point in nearly a decade. She stated that the government is putting 2 million barrels of gasoline and heating oil stockpiles in the U.S. Northeast on "active standby" and preparing other emergency contingency measures.

She stated that the administration expects corporations will "proactively address this demand" to create stockpiles. In the event that this does not occur, the administration "will need to consider extra federal requirements or other emergency measures," Granholm continued without elaboration.

In a June meeting with the same refiners, Granholm backed away from a plan to ban U.S. petroleum exports, but the notion has not been abandoned.

Refiners have stated that a prohibition might flood domestic markets with fuel and compel some plants to reduce production, which could reduce the supply and increase costs.

Moreover, Northeast refiners purchase oil and fuels, a trade that might be impacted by an export prohibition.

A person acquainted with Granholm's discussions with refiners stated, "The export talk is, at best, a diversion; at worst, it is destructive to price and supply."