President Donald Trump urged oil companies to expand refining capacity in a bid to bring down fuel costs at the pump amid Iran war shocks, but it may not be as simple.
A Tough Sell
A report by the Wall Street Journal outlined Trump’s meeting with oil executives on Tuesday, in which he pushed for scaling refining capacity. The report noted that expanding capacity could be a “tough sell” to oil producers, as building refineries may not be as profitable for the enterprises.
The report stated that building refineries would cost billions of dollars and would take years to execute. Notably, GasBuddy analyst Patrick De Haan, during an exclusive interview with Benzinga earlier, said that oil producers were beholden to shareholders and that Trump could not direct them to lower gas prices because they have little incentive to do so.
Oil companies could choose to build new projects, but such a step would take years to bear fruit, De Haan said during the conversation.
Chevron Charts Venezuela Investment
Oil giant Chevron Corp. (NYSE:CVX) recently said it plans to invest over $7 billion over the next five years, targeting doubling production to approximately 600,000 barrels per day from 2026 levels.
The plan comes after Trump said that the U.S. had secured 65 billion barrels of oil from Venezuela, touting it as the “biggest oil deal” in the history of the world. While Trump has touted Venezuelan oil to offset high costs, De Haan said that refining capacity remains a challenge and there was no room for more oil, as refineries were working at 95% capacity all summer.
Oil, Gas Prices
At the time of writing this article, West Texas Intermediate (WTI) crude futures expiring in October were down 1.07% at $90.04 per barrel, while Brent crude futures expiring in November declined 1.18% to hover around $94.5 a barrel.
On the gas front, the national average price remained above $4 to $4.1203/gallon on Wednesday, with the national average price of diesel at $5.6879/gallon, according to data from the American Automobile Association (AAA).
Trump’s ‘Tanker for Tanker’ Policy
Amid the Iran war, Trump had reportedly approved a “tanker for tanker” policy against Iran as the U.S. struck two Iranian oil vessels parked ahead of the naval blockade imposed by Washington. The strikes come as tensions escalated between the two countries following an exchange of missile strikes after the U.S. struck Iranian targets on Sunday.
Iran responded by targeting U.S. assets in the region, while also criticizing a strike in Iran’s Kuhestan on a wedding celebration that resulted in the death of four people, including a child.
Trump also suggested that the Strait of Hormuz should be renamed the “Trump Strait,” touting the U.S.’s control over the waterway, but the suggestion was met with staunch criticism from Democratic Party leaders, including Senate Minority Leader Sen. Chuck Schumer (D-NY).
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