The United States has increased imports of heavy crude oil as Democrat President Joe Biden threatens to use executive powers to force companies to help with soaring gas prices.
Amid Western sanctions on Russia, Biden sent a letter earlier this week calling on U.S. energy producers to make more gasoline and diesel.
Customs data shows that U.S. refiners last month imported the highest number of crude barrels in nearly two years, with refiners importing 33.5 million barrels of heavy crude in May.
According to the data, 56 vessels discharged nearly 1.1 million barrels per day (BPD) of Mexico’s Maya, Ecuador’s Napo and Oriente, and Iraq’s Basra heavy, among other grades.
Heavy crudes cost less than lighter shale oils that are produced in the United States and typically produce more diesel and less gasoline.
U.S. inventories of diesel were down to 104 million barrels in May, with further declines expected. Meanwhile, margins continue to rise, further lining refiners’ pockets.
While higher heavy-crude imports are common in summer-driving months, the latest boost to imports comes after the Biden administration called on refiners to bring “near-term solutions” to address rising gas prices and inflation levels at a 40-year-high.
“Your companies and others have an opportunity to take immediate actions to increase the supply of gasoline, diesel, and other refined product you are producing,” Biden wrote in the letter to oil refiners.
“My administration is prepared to use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied.”
Biden’s letter comes as gas prices have soared across the country, currently standing at a national average of $5 per gallon, according to AAA.
The president has attributed the higher prices to the Russia–Ukraine war and increased demand after the COVID-19 pandemic.
In response to Biden’s letter to Marathon Petroleum Corp., Valero Energy Corp., Phillips 66, Chevron, BP, Shell, and ExxonMobil, the latter released a statement stating that the administration’s policies were partly to blame for the current economic climate.
“In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions—such as waivers of Jones Act provisions and some fuel specifications to increase supplies,” ExxonMobil said Wednesday.
The oil giant states that it has also “been investing more than any other company to develop U.S. oil and gas supplies” including more than $50 billion over the past five years, which it says has boosted U.S. production of oil during this period by nearly 50 percent.
“Longer term, [the] government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines,” it added.
Imports of Mexico’s heavy crudes, mainly Maya and Altamira, reached around 507,000 barrels per day last month, the highest in 11 months, while fuel oil imports from Mexico were near a record at 156,000 BPD.
U.S. refiners also imported a record volume of Basra Heavy crude from Iraq, nearly 129,000 BPD, in May while imports of Ecuadorian Oriente and Napo crudes reached around 112,000 BPD, the highest in 12 months.
Among the heaviest crude buyers were Valero Energy Corp’s Benicia and PBF Energy’s Martinez refinery, both of which are located in California, and Chevron’s refinery in Pascagoula, Mississippi.
“We have healthy demand, low product inventories, and strained refining capacity,” said Refinitiv senior energy analyst Corey Stewart.
“Refiners are looking to bring feedstocks into the U.S. to most economically meet what products the markets demand,” he added.