The Biden administration works to curb rising inflation and gas prices
A MARTINEZ, HOST:
The Federal Reserve's monetary policy is a lever for curbing inflation. But what's the White House doing to tamp down the highest rate of inflation in four decades? Brian Deese is the director of the White House National Economic Council. Director Deese, I'm in Los Angeles, so I hope you'll understand why I want to start with gas prices. This morning, we learned that President Biden reached out to oil company CEOs to explain about their lack of refining capacity. What does he want to see done?
BRIAN DEESE: Well, the issue we have today is that not only are gas prices high, but that that is being driven by the fact that the amount of profit oil companies are generating for every unit of gasoline that they're refining is at historic highs. So the last time that crude oil was at $120 a barrel, the price at the pump was about $4.25 a gallon. Today, it's at $5 nationwide, and it's higher in other parts of the country. And so what the president is putting a spotlight on is that is in large part because oil refining companies reduced their capacity to refine product during the pandemic, and he is calling on them to invest those record profits to increase that capacity as quickly as possible. He's also signaling that he's prepared to use any emergency tools he has at the federal government level, but these companies have a responsibility to take those record profits that they're making and to invest in increasing capacity so we can get more supply into the market and help bring prices down.
MARTINEZ: But one of the things I know about the Biden administration is that he'd like to move away from oil, more toward renewable energy, electric vehicles. Why would oil companies invest in refineries? If the Biden administration's plans on that are going to work, maybe they're not going to need this stuff in a few years.
DEESE: Well, let's just be really clear about the facts. First of all, we are already producing natural gas and oil in this country at record levels. In fact, we are a net exporter of oil right now because we are producing so much, 11.2 million barrels a day of production already happening in the United States. That's point one. Point two is the president has been very clear that because of the war in Ukraine and because of Russia's aggression and Russian oil coming off the market, in the short term what we need is supply to come on. And these companies have every incentive to do so. These high prices give them a market incentive, a profit incentive to do so. And the president is saying they should invest. And they have signaled, some of them, that they are prepared to do so. And that's what's necessary right now. At the same time, both the president believes and the market is moving toward more clean energy sources. But what we need right now is for the companies to work to bring more production online, build on that record production and also for us to work around the world to get global supplies up as well.
MARTINEZ: If these companies fail to take these steps, what is the president prepared to do?
DEESE: Well, the president's outreach - we have been engaging with these companies for months. Some of them have indicated good faith efforts to try to increase production. We're encouraging all of them to do so. In the president's letter today and this outreach, he directed his secretary of energy to convene an emergency meeting on this issue later this week. And we're focused on trying to find solutions. We're trying to be practical here. And the president is certainly prepared to use the tools at the federal government level. But he is also trying to be very clear that this is a moment for everybody, whether you are running a company or you're in government, to recognize that the American people are hurting because of these high gas prices.
MARTINEZ: But what's he willing to do? What is he willing to do? If you don't get buy-in from these companies, director, what is he willing to do?
DEESE: Well, he signaled in the letter today that he is prepared to use all of the emergency authorities that he has in order to increase production. Best way to do that is to partner with these companies to try to help facilitate any near-term effort that they need. What we have heard from many of them is that they actually have everything that they already need. And if that's the case, then they need to move, and they need to invest and produce right now. Our focus right now is on trying to get to solutions. But just to be very clear, the president has signaled that all tools are on the table, and he is prepared to use those tools as necessary. Our hope is - (inaudible) - can find ways to get the industry to move more quickly.
MARTINEZ: If the oil companies have what they need, what do they need to have for incentive to use them? Why wouldn't they have used them already?
DEESE: Well, that's part of the question that the president is trying to raise. When you have profit margins at the levels that they are today, you know, in a market economy, companies should have incentive to invest. But what the president is trying to do is, because we are in this situation and because of the urgency that typical middle-class families are facing at the pump, he's signaling he's prepared to use any authorities, including things like the Defense Production Act that he has already invoked, to help facilitate supplies for other elements of energy production, that he is prepared to do that. He has already used his authority to put a million barrels a day of oil on to the market from the Strategic Petroleum Reserve. And he's signaling that he is prepared to use other tools at the federal government level if they are necessary. But at the end of the day, if the companies say that they don't need anything, then what we need to see from them is action.
MARTINEZ: Brian Deese is director of the National Economic Council. Director, thanks.
DEESE: Thank you.
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