Biden ordered oil companies to explain why they are cutting gasoline production

Joe Biden asked oil companies to explain why they are cutting gasoline production as prices rise above $5 a gallon.

Gas prices in the United States have risen to a record high of $5 per gallon.

President Joe Biden has written to oil companies asking them to explain the gas production cuts.

In a letter by Reuters, he complained that gas companies benefit from higher prices.

Average US gas prices at the pump have soared to a record high above $5 a gallon.

President Joe Biden called on oil companies to explain why they were cutting gasoline production in a letter seen by Reuters, with prices soaring to record levels in the middle of the summer driving season.

In the letter to gas companies, including Marathon Petroleum, Valero Energy, Exxon, Phillips 66, Chevron, BP, and Shell, Biden criticized them for cutting back on oil refining for higher profits.

"In a time of war, refinery profit margins far above the norm, which is passed directly to American families, is unacceptable," Biden said.

"The lack of refining capacity - and the resulting unprecedented profit margins at the refinery - limits the impact of my administration's historic actions to address Vladimir Putin's price hikes and increases costs for consumers," he added.

Energy costs are rising dramatically in the United States due to Russia's war against Ukraine. According to data from AAA, US gas prices hit a record $5 a gallon for the first time, up about 63% from the same period last year. Meanwhile, US crude oil is up 82% at the same time.

Prices are rising across the West Coast, with an average price of $6,435 in California and $5.55 in Washington.

It adds to the problem of hyperinflation in the United States that has driven up the costs of essential goods and services for many American consumers. In May, the US Consumer Price Index unexpectedly rose by 8.6% - the highest inflation rate since December 1981.

And while the Federal Reserve already raised interest rates by 0.5 percentage points in May to tackle inflation, economists expect the central bank may raise rates further at its upcoming meetings.

The mounting pressure from Biden comes in the wake of his recent attacks on energy companies to reap huge profits as Americans pay record prices at the pump. Recently, he singled out ExxonMobil, saying it "made more money than God this year, and by the way, nothing has changed."

He also complained that his administration's plan to focus on ethanol and biofuels was a futile strategy to help bring down gas prices.

High crude oil prices are one problem, but bottlenecks in oil refineries are making it worse. Refineries have been hit hard by the COVID-19 pandemic, shutting down many operations in 2020 and 2021. To that end, the inability to ramp up production puts more pressure on gas prices, leading analysts to say there are no quick fixes. So the current crisis.