Thursday, March 28, 2024
Hawai'i Free Press

Current Articles | Archives

Monday, June 20, 2022
ExxonMobil calls for a Jones Act waiver ahead of Big Oil Meeting with Administration
By Michael Hansen @ 5:44 AM :: 1670 Views :: Jones Act

ExxonMobil calls for a Jones Act waiver ahead of Big Oil meeting with Administration

by Michael Hansen Hawaii Shippers Council, June 18, 2022

The recent sharp rise in U.S. petroleum prices has put the Administration at loggerheads with the oil industry over charges of purposeful low production and profiteering.

As part of the oil industry’s response to the Administration, the oil major ExxonMobil publicly advocated for a Jones Act waiver to more efficiently transport domestic oil from regions of surplus to those of high demand within the country during the current environment of high prices.

The Administration is scheduled to meet with oil company executives on Tuesday, June 21, 2022, to discuss ways to increase domestic production and lower costs, and one of the issues likely to be addressed is the Jones Act.

The ExxonMobil advocacy for a Jones Act waiver is significant and could be a turning point in reform efforts. The key reasons are, ExxonMobil: is the largest and industry leading U.S. oil company; has a vested interest in domestic shipping as a major shipper (i.e. cargo owner) of their own petroleum cargoes; and, along with the other large U.S. oil companies, has not heretofore embraced Jones Act reform to avoid being embroiled in another highly political issue.

The row between the Administration and “Big Oil” came to a head with President Joseph R. Biden’s letter of June 14, 2022, to several U.S. oil companies including ExxonMobil accusing them for the high U.S. fuel prices, unused refining capacity and profiteering.

Reuters Thompson reported in a news article, “Biden blasts oil refiners for record profits on pain at the pump,” published on June 15, 2022, that, according to an unnamed While House official, President Biden’s letter was sent to seven (7) large oil companies: Marathon Petroleum Corp, Valero Energy Corp, Exxon Mobil Corp, Phillips 66, Chevron Corp, BP and Shell.

The two leading U.S. petroleum industry trade associations, the American Petroleum Institute (API) and American Fuel & Petrochemical Manufacturers (AFPM), responded to President Biden in a joint letter dated June 15, 2022. They publicly announced their action in a press release, “Trade Groups Respond to President Biden’s Letter to U.S. Refiners,” issued on June 16, 2022. The letter outlines in some detail what the trade associations identifies as “seven realities” ranging from the nature of the global petroleum market to the utilization of U.S. refining capacity.

Also on June 15, 2021, CNN in a news article, “Biden urges oil companies to boost supply, slams high profit margins as ‘not acceptable’ in new letter,” said, “[t]he letter is part of Biden’s effort to shift blame for soaring gas prices, which have become a major political problem . . .”

Reuters further reported on June 15th, “U.S. Energy Secretary Jennifer Granholm plans to host an emergency meeting on how refiners can respond to higher prices . . . no later than June 21 . . .” The purpose of the meeting is obtain responses to President Biden’s ask of the oil company executives “. . . to provide ‘concrete ideas’ to increase oil refining and explain why they may have cut such capacity in the last two years.”

Finally, the Exxon Mobil Corporation (stylized as ExxonMobil) (NYSE: XOM) issued on June 15, 2022, a press release, “ExxonMobil statement regarding President Biden Letter to Oil Industry.” responding to President Biden’s letter.

Among other things, ExxonMobil recommended in their press release that, “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.”

Although ExxonMobil didn’t define their Jones Act waiver proposal, it’s likely they are contemplating a facility that would allow foreign-flag tankships to provide the coastwise transportation of domestic crude petroleum oil from the U.S. Gulf Coast (USGC) to refineries on the U.S. East Coast (USEC). The ocean transportation of crude oil is performed by oceangoing tankships of the type known as crude carriers, which are designed and built to carry crude oil in bulk.

There is currently a surplus of domestic crude of approximately three (3) million barrels per day (MM b/d) available on the USGC being exported to foreign countries from marine terminals in Texas and Louisiana and shipped on foreign-flag crude carriers.

After the U.S. national crude oil export ban of 1975 was repealed in 2015, the U.S. oil refining industry, centered on the USGC, was no longer compelled to refine all the domestically-produced crude oil. This allowed the producers of domestically-produced and geographically-stranded crudes (i.e., the wrong grade of crude in the wrong place) to export their crude oil.

While domestic crude oil -- especially light sweet crude from the Permian Basin and the Bakken formation -- is exported from the USGC, refineries on the USEC import foreign crude oil. Both the exports and imports are transported on foreign-flag crude carriers. This trading pattern is known as import substitution (as opposed to shipping the domestic crude from the USGC to USEC) is driven by the lack of Jones Act-eligible crude carriers and the cost of Jones Act shipping generally.

The only Jones Act-eligible crude carriers are the 11 tankships fully employed in the Trans Alaska Pipeline System (TAPS) fleet operating between Alaska and the U.S. West Coast (USWC) and Hawaii. The non-availability of these eleven crude carriers to transport crude oil from the USGC to the USEC would fulfil one of the necessary conditions for approval of a Jones Act waiver request.

However, the authorizing federal Jones Act waiver statute only permits an initial 10 day waiver period with 10 day extensions for a total of 45 days granted on an administrative basis. For the intended purpose of providing relief, an administrative waiver would be too bureaucratic and short-term. A more realistic solution would be a near-term statutory exemption for a period of approximately two and one-half years (perhaps from mid-2022 to mid-2025) to relieve the effects of the current inflationary impacts.

It will be interesting to learn the outcome of the proposed June 21st Department of Energy meeting with the chief executives of the large oil companies and and whether or not the ExxonMobil suggestion of Jones Act waiver will be discussed and further if broader support for a Jones Act waiver (or, exemption) will emerge.

---30---

Press Release: ExxonMobil statement regarding President Biden Letter to Oil Industry

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT