American gas prices continue surging to new record highs on a daily basis even as crude oil prices have dropped below previous highs and despite the fact that U.S. refining margins have skyrocketed in recent weeks
Lower supplies from Russia and China and surging summer demand indicate no price relief is in sight for struggling Americans. Meanwhile, Joe Biden’s energy policies are making it more likely that there will not be any new refineries built in the U.S., according to Chevron CEO Mike Wirth, which means that there will be no supply increases to bring prices down in the future.
In an interview with Bloomberg, Wirth said that a new refinery requires capital commitments 10 years in advance and needs decades of production to offer a return on investment for shareholders. He added that Western governments are sending mixed signals in their policy discussions, basically saying they don’t want refined petroleum products.
The Biden White House is currently demanding that domestic producers pump more oil to increase gas supply while at the same time hammering American refiners and distributors for “price gouging.” The administration is also threatening to impose a “windfall profits” tax on gas retailers.
Wirth said that global fuel demand has rebounded with strength even though international air travel and China’s fuel consumption still lag at levels below where they were before the COVID-19 pandemic.
He added that U.S. gas supply tends to move slower than demand, as seen in 2020 and again this year. He noted that there hasn’t been a new refinery built in America since the 1970s, and said that his personal view is that under current conditions, “there will never be another new refinery built in the United States.”
Wirth noted that in the last two years some U.S. refineries have even closed and others have been repurposed to refine biofuels. Those trends are directly caused by federal policies that indicate long-term reduced demand for refined oil products.
He said that the government narrative that the oil industry is not growing domestic production as much as possible is inaccurate. He said that the Permian Basin production growth outlook has been raised by 15% this year alone.
Wirth went on to say that the big American oil companies need to meet with the Biden administration for an honest conversation about the “relationship between energy and economic prosperity, national security, and environmental protection.”