As the United States has struggled with inflation and high gas prices for months, in August the Biden administration urged oil refiners to limit their fuel exports. But Exxon Mobil has warned that limiting exports could make things worse for the global oil supply, eventually driving up prices in the country again.
According to a letter accessed by The Wall Street Journal from Exxon CEO Darren Woods to the Energy Department, Exxon warned that refiners should not stop exporting in order to put more gas and oil in reserve.
This is what the Biden administration had asked seven major U.S. refiners to do in August, the Journal reported.
In a letter the outlet obtained from Energy Secretary Jennifer Granholm to major refiners, she warned that gas reserves were low and needed a boost.
“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 wrote in the letter, according to The Wall Street Journal.
“It is our hope that companies will proactively address this need. If that is not the case, the Administration will need to consider additional Federal requirements or other emergency measures.”
But Exxon this week urged that exportation needs to continue from the United States so that the broader global market can begin to restabilize, especially in the face of Russian supplies being cut off by many due to that country’s war with Ukraine.
“Continuing current Gulf Coast exports is essential to efficiently rebalance markets—particularly with diverted Russian supplies,” Woods wrote in the letter to the Energy Department, the Journal reported.
“Reducing global supply by limiting U.S. exports to build region-specific inventory will only aggravate the global supply shortfall,” the Exxon CEO added.
The West Texas Intermediate, the price benchmark for the U.S., was $80.19 a barrel as of early Friday afternoon (Eastern Time).
The price for Brent Crude, the general benchmark for Europe and other parts of the globe, was $88.02 a barrel.
However, the Energy Department has continued to focus on the issue of oil and gas levels being low throughout the nation.
One spokesman pointed out that this could be a particular problem now that parts of the country are in the middle of hurricane season, the Journal reported.
“The administration has impressed upon the oil and gas industry that it must do more to ensure fair prices and adequate supply for all Americans, while meeting the needs of our allies,” the spokesperson said in a statement.
But Woods has advocated that the free market must be allowed to regulate itself, even in this oil and gas crisis that has been affecting the entire globe for months.
“Free market incentives remain the most efficient way for the industry to address these problems,” Woods said, according to the Journal.
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