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UNADDRESSED REFINING CONSTRAINTS: With retail fuel prices on the upswing again, the nation’s refining capacity constraints are coming back into focus as the Biden administration battles industry over the causes of and solutions to rising costs.

The Biden administration is taking aim at refiners, especially large integrated energy companies like ExxonMobil, for their substantial margins in the high price environment.

At the same time, officials have acknowledged the strain on global refining capacity — which many industry leaders have said is a major factor — for contributing to higher prices.

A look at the numbers: The U.S. has lost substantial oil refining capacity in recent years due to various factors, whether it be the demand destruction wrought by COVID or other market forces, such as lack of investor interest in new capacity, or lack of stakeholder interest in keeping refinery certain assets up and running to serve an economy undergoing a green transformation.

Since 2019, some 1.1 million barrels of capacity has either been shuttered or converted to manufacture renewable fuels, with more planned in coming years. Globally, the number is in the 3 million barrel range, limiting the volumes of fuel refiners are able to manufacture and putting pressure on prices.

Oil prices have fallen significantly since their post-invasion peak but are ticking up again on news of OPEC+’s planned cut, in addition to planned and unplanned outages that have put additional pressure on prices in recent weeks — especially in the West and Midwest.

U.S. refiners are otherwise basically doing all they can, having operated at 91.3% of operable capacity for the week ending Sep. 30.

“We’re doing everything we can to make all the products we can and in every refinery we have,” an industry executive told reporters on a call Friday. “I believe that all my competitors are doing exactly the same thing. There's incentive to do it. Margins are there.”

Where Biden stands: President Joe Biden, in June letters to top refiners, acknowledged the shortage of refining capacity at the time and called it a “global challenge and a global concern” driven by factors that predated his tenure. The White House at the time floated potentially using the Defense Production Act to refine more oil.

The administration criticized refiners at the time for making big bucks and is doing so again now, with drivers facing rising prices.

Their high margins are possible “because of ongoing refinery issues,” Energy Secretary Jennifer Granholm said after her recent meeting with refiners. But she also criticized companies for failing “to maintain sufficient regional inventories to buffer demand when refineries go offline, while those same companies export gasoline and diesel at record levels.”

Congressional Democrats have proposed recouping some of those profits with a windfall tax, something Gov. Gavin Newsom is also pursuing in California, although the effort hasn’t gained the necessary steam.

“I think there's a level of frustration that nothing can be done but, you know, the reality is very little can be done,” an oil industry source told Jeremy. “Refiners are running all out.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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YELLEN SAYS CUTS ARE BAD FOR THE WORLD ECONOMY: Treasury Secretary Janet Yellen told the Financial Times in an interview before the IMF and World Bank’s annual meeting in Washington that the OPEC+ decision to cut oil production is “unhelpful and unwise” for the global economy, and especially for developing nations—even as she stopped short of detailing what measures Biden is considering to respond.

Leaders this week will try to finalize the Russian oil price cap announced in June: They hope to implement the cap beginning Dec. 5., though the price has not yet been determined. “Holding down prices is something that’s particularly helpful to developing countries that are suffering from high energy prices,” Yellen said of the cap.

… MEANWHILE, DEMOCRATS ASK CONGRESS TO HALT SAUDI ARMS SALES: Two congressional Democrats are proposing new legislation that would halt arms sales to Saudi Arabia, saying in a Politico op-ed that the move would allow for a potential rebalance of U.S.-Saudi relations and pressure the kingdom to reverse its “embrace” of Russia.

"The Saudi decision was a pointed blow to the U.S., but the U.S. also has a way to respond: It can promptly pause the massive transfer of American warfare technology into the eager hands of the Saudis," wrote Rep. Ro Khanna of California and Sen. Richard Blumenthal of Connecticut.

Though they acknowledged similar measures have been considered for several years, the duo said they think legislation is now more viable.

Fact check: Saudi Arabia is the largest buyer of U.S. military equipment, placing billions of dollars of orders annually—and under the Arms Export Control Act of 1976, Congress does have the power to review and veto these sales. But it has never garnered enough votes to do so.

Khanna noted on Twitter Friday that the U.S. supplies Riyadh with 70% of its weapons: “For them to drive up energy prices for the American people is outrageous,” he said. “It’s simple. If the Saudi-led OPEC+ doesn’t reverse their decision, the US should stop sending them weapons.”

UAE PRESIDENT TO VISIT PUTIN IN MOSCOW: United Arab Emirates President Sheikh Mohammed bin Zayed al-Nahyan will travel tomorrow to Russia to meet with Russian President Vladimir Putin, UAE state news agency WAM announced today. The visit comes just days after OPEC+ announced its oil production cuts, an announcement that further strained relations between the oil producers’ group and the U.S.

It is unclear what the leaders plan to discuss, though people close to the UAE said the visit by Sheikh Mohammed reflects his policy of speaking to all sides. During his visit, WAM said, he will discuss with Putin “the friendly relations between the UAE and Russia along with a number of regional and international issues and developments of common interest.”

FRANCE GRAPPLES WITH GAS SHORTAGE AMID REFINERY STRIKES: Nearly one-third of France’s gas stations are suffering supply shortages due to a strike by refinery workers, which stretched into a third week today and caused 2,000 stations nationwide to run completely dry, according to data from French website mon-essence.fr.

More than 60% of France's refining capacity has also been taken offline by the strikes.

French Energy Minister Agnes Pannier-Runacher said today that the government has released additional strategic reserves and has ramped up its imports to help alleviate the shortage.

French President Emmanuel Macron also called for a quick end to the crisis: "Negotiations are under way and on track...I hope that in the coming hours, the soonest, this can be resolved. Blocking is not a way to negotiate," Macron said.

GERMANY ANNOUNCES $93 BILLION GAS PRICE RELIEF PLAN: Germany said today it plans to “urgently” implement a $93 billion gas price relief plan aimed at shielding consumers from soaring energy prices, as leaders continue to warn of high costs and ongoing supply risks this winter, despite already having filled gas storage reserves in an effort to offset lost Russian supplies.

The plan would give households and smaller businesses a one-time payment to cover the cost of a single month’s gas bill, and would include a mechanism to limit prices from March, Reuters reports. It would be paid for under the $194 billion energy price relief package passed last month by German Chancellor Olaf Scholz.

"Is it perfect? Certainly not. Does it include guidelines that can help? We think so," BDI industry association president Siegfried Russwurm said of the plan.

RIVIAN STOCKS PLUMMET FOLLOWING RECALL NEWS: Shares of EV maker Rivian dropped by roughly 10% this morning after the automaker announced Friday that it is recalling nearly all of its vehicles due to an issue with its fasteners, which it discovered may not have been fully tightened in all of its vehicles.

There were no known injuries caused by the loose fasteners, the company said, though an improperly installed one could cause excess wheel tilt or impact steering control. They plan to double-check the fasteners of the 12,000 recalled vehicles and return the cars to consumers “within 30 days.”

The recall extends to every Rivian R1T pickup and R1S SUV made through late last month, as well as some of its vehicles produced for Amazon. Of the vehicles recalled, Rivian estimates just 1% are impacted by the fastener defect.

NEW BLACKROCK WEBPAGE DISPUTES ENERGY BOYCOTTING CHARGES: BlackRock, intent on “setting the record straight,” launched a webpage Friday rebutting Republican-led charges that the fund manager is boycotting ventures in traditional fossil fuel energy as part of its ESG-informed investment strategy.

“We DO NOT boycott the energy industry,” the page says in big, bold letters, adding that BlackRock has invested $170 billion in American energy companies on behalf of clients, “including pipelines and power generation facilities.”

BlackRock is seeking to thwart attacks from Republicans in Congress and at the state level. GOP state financial officers have overseen a blacklisting of it and other firms that embrace ESG, contending that the funds’ “boycott” traditional energy sources against the interest of their states and investors.

Just last week, Louisiana State Treasurer John Schroder announced a liquidation of all state investments with BlackRock investments by the end of the year.

Some major banks and investment firms have adopted stricter policies to prioritize green energy over fossil energy, while financing for coal has been especially scaled back. For example, British multinational bank HSBC intends to phase out the financing of coal-fired power and thermal coal mining by 2030 in EU markets and other markets in the developed world.

Still, large firms, including BlackRock, continue to finance oil and gas projects, to the chagrin of environmentalist critics who contend they are moving too slowly to go green.

JPMorgan Chase, which has been barred from entering into banking contracts with West Virginia for its green investment sympathies, has been hit from both directions on this. Democratic Rep. Rashida Tlaib needled CEO Jamie Dimon during a recent hearing about whether his firm has a policy against funding new oil and gas ventures, to which he responded no, adding that such a policy would be the “road to hell for America.”

AUSTRIANS TAKE EU TAXONOMY TO COURT: Austria promised a lawsuit challenging the EU’s sustainable finance taxonomy, and they’ve now followed through.

The country, which is among Europe’s anti-nuclear contingent, filed a complaint Friday with the Court of the European Union challenging the European Commission’s designation of nuclear and natural gas as “sustainable” sources if specific conditions are met.

The taxonomy was developed to inform investment decisions and direct financing toward green sources in accordance with EU net-zero emissions targets, and the European Parliament approved the labeling of nuclear and gas as sustainable in July.

With its finalized, the taxonomy “increases the risk of greenwashing,” Austrian climate minister Leonore Gewessler said, the Financial Times reported today.

She also said there is “an inherent and quite big risk of stranded [fossil fuel] assets,” under the regulation.

The taxonomy was designed to avoid that by applying conditions, such as the requirement that assets approved and built for natural gas shift to renewable or low-carbon fuels gas by the end of 2035.

The Rundown

Associated Press ‘Nothing’s left’: Hurricane Ian leaves emotional toll behind

New York Times ‘Eye of Sauron’: The dazzling solar tower in the Israeli desert

Washington Post These cities turned parks into orchards where anyone can pick for free

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The Energy Information Administration publishes its latest Gasoline and Diesel Fuel Update.