Reps. Krishnamoorthi, Malinowski, Davids, And Spanberger Call For Answers From U.S. Energy Information Administration On Contribution Of Oil Refining Shortfall To High Gas Prices

WASHINGTON - Today, Representatives Raja Krishnamoorthi, Tom Malinowski, Sharice Davids, and Abigail Spanberger called on the head of the U.S. Energy Information Administration, Dr. Joseph DeCarolis, to provide a briefing on the impact of declining global oil refining capacity on rising gas prices. As the Members noted, while current crude oil prices are roughly the same as in March, the average price of gasoline has climbed by 17% in the last three months:

"That disparity between oil prices and gasoline prices, the President argues, is the result of historically high profit margins for refining crude oil into gasoline and other petroleum products. The President's prognosis of rising fuel costs echoes the U.S. Energy Information Administration's (EIA) June 2022 Short-Term Energy Outlook, which reported that wholesale prices for petroleum products, such as diesel and gasoline, have increased more than the price of crude oil, and this increasing disparity between gasoline prices and oil prices reflects the rising cost of refining crude oil into petroleum products."

Even as American refineries are operating near a peak utilization rate of 96%, available domestic refining capacity has declined nearly 1 million barrels per day since 2019 due to refinery shutdowns during the pandemic. In response to this state of affairs, the Members requested a briefing on American refining capacity, specifically requesting answers to the following questions:

1. Is there a possibility that the shortfall in refining capacity will cause shortages of certain fuels or other petroleum products?
2. How much of the recent rise in gasoline prices can be attributed to rising refining costs?
3. When do you project that refining costs, or the "crack spread," will return to pre-pandemic levels?
4. Assuming constant demand for refined petroleum products, what events, other than expanding U.S. refining capacity, could potentially reduce the crack spread?
5. If a refinery capable of refining 200,000 barrels of crude per day were brought online, what would be the impact on the crack spread and retail gasoline prices?
6. If the recent reduction in U.S. refining capacity of approximately 1 million barrels per day were replaced by increases in foreign refining capacity, what would be the impact on U.S. energy markets?

The letter from the members is available here.

Congressman Krishnamoorthi previously wrote to President Biden, expressing concern about the oil refining shortage, and the Congressman was joined by Congresswomen Spanberger and Davids in introducing a resolution urging the President to use the Defense Production Act to restart idled refineries and bring down gas prices in the near-term without endangering long-term climate goals.