To The Moon

It is rare that US president instruct oil companies on production issues. President Biden did. He penned a letter to energy executives this Wednesday, acknowledging the global refining capacity shortage, and asking for help.

On the President's numbers, ~3.0mb/d of refining capacity has shuttered since the beginning of the pandemic, to "work with my Administration to bring forward concrete, near-term solutions that address the crisis".

What crisis? Of course the insane inflation, which definitely hurt his mid-term election.

And you guess how $Exxon Mobil(XOM)$ respond?

In the short term, the US 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.

In the long term, government can promote investment through clear and consistent policy that supports US resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines.

The Jones Act is a federal law that regulates maritime commerce in the United States. The Jones Act requires goods shipped between U.S. ports to be transported on ships that are built, owned, and operated by United States citizens or permanent residents.

This respons is to declare the way to solve the problem, "you have to change policies to give us more space to operate."

To sum up, Exxon does not appear to believe that there is excess capacity in the US refining system that could easily be returned to service.

Another point is China, for every barrel of reserve the Biden government has sold, China has taken a barrel off the global market, adding it to stockpiles, according to Kayrros data.

That means, US is trying to enlarge the supply, while China's enlarging its demand at the same time.

So interesting!