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Deep rift lies behind Biden’s criticism of oil and gas industry

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© Reuters. U.S. President Joe Biden announces the release of 1 million barrels of oil per day for the next six months from the U.S. Strategic Petroleum Reserve, as part of administration efforts to lower gasoline prices, during remarks in the Eisenhower Executive Of

By Nandita Bose and Jarrett Renshaw

WASHINGTON (Reuters) – U.S. President Joe Biden has publicly criticized oil and gas executives for banking big profits from high gasoline prices but he has rarely spoken directly to the heads of energy companies or their representatives, White House records and interviews with industry sources show.

Biden said at a labor union event this month that Exxon Mobil Corp (NYSE:XOM) “made more money than God this year” and sent a letter to seven oil and gas companies calling on them to increase production to help ease the burden on consumers.

His actual engagement with energy company officials is rare, however, according to the industry sources and records, a marked contrast to Biden’s meetings with top executives in retail, logistics and agriculture, as the government grapples with inflation at a 40-year high and supply chain snarls.

Gas prices on average at the pump have not been as high for decades, including during the late 1970s energy crisis.

The Biden White House’s testy relationship with the fossil fuel industry has grown even more complicated as Russia’s invasion of Ukraine cut global energy supplies and sent crude oil and natural gas prices skyrocketing.

Biden, who campaigned on a promise to reduce dependence on fossil fuels which contribute carbon emissions linked to climate change, is leaning on the industry to curb inflation. Oil and gas companies are reaping higher profits than they have in decades and mostly returning that windfall to shareholders in the form of buybacks.

Industry executives complain Biden isn’t asking for help in the right way.

“Your administration has largely sought to criticize, and at times vilify, our industry,” Chevron (NYSE:CVX) CEO Michael Wirth wrote in an open letter to Biden released on Tuesday.

“The outreach from the administration is lacking,” said Frank Macchiarola, a senior policy executive at the American Petroleum Institute trade body.

Asked about the Chevron CEO’s letter, Biden said “I didn’t know they’d get their feelings hurt that easily.”

CARROT-AND-STICK APPROACH

The Biden administration has forged a carrot-and-stick relationship with many companies, criticizing some corporate practices and egging on unions while offering some industry-friendly changes and hands-on support on issues like backed-up ports.

Last year, the White House held four meetings with chief executives to tackle a supply chain crisis that led to a shortage of goods around the Christmas holidays. Biden participated in three of those, according to White House records; none involved oil and gas companies.

White House officials worked closely with tech companies to curb misinformation about COVID-19, executives involved told Reuters. Biden met retailers and infant formula manufacturers as his administration tackled a shortage of baby formula.

However, he has met only once with chief executives of Exxon, Chevron and ConocoPhillips (NYSE:COP), as part of a larger briefing of energy, manufacturing, shipping and banking to discuss the Ukraine crisis, a March event hosted by the Business Roundtable.

This month, when Exxon and Chevron requested a White House meeting for their chief executives, they saw Brian Deese, who heads Biden’s National Economic Council. When asked by Reuters on June 20, if he will sit down with oil and gas CEO’s, Biden said, “No … because my team is going to do that.”

The White House said in a statement to Reuters that in addition to the many meetings with Cabinet secretaries, oil industry executives have met with White House officials on more than a dozen separate occasions over the past year. A White House official did not offer a breakdown of when the meetings were conducted and who participated in them.

“President Biden has made clear that he is prepared to use all the tools available to him to reduce gas prices for the American people,” the official said.

The departure of Cedric Richmond, director of the Office of Public Engagement, has coincided with less contact in the White House, industry officials said. Biden’s climate adviser Gina McCarthy, who has regularly met with oil and gas industry officials in the past is not taking such meetings.

Biden directed U.S. Energy Secretary Jennifer Granholm to convene an emergency meeting with industry officials, which is scheduled for Thursday.

GAS PRICES ARE POLITICAL

Western sanctions imposed on Russia for its invasion of Ukraine led to low supplies of fuel and oil in Europe, forcing European nations to compete for barrels with the United States. Crude prices have doubled since Biden took office, and gasoline prices have jumped to an all-time record.

Graphic: The real cost of gasoline – https://graphics.reuters.com/USA-ENERGY/COSTS-GASOLINE/zdvxokwympx/chart.png

American voters’ worries about the economy are their top concern, opinion polls show, and are a major drag on Democrat Biden’s popularity.

Blaming energy companies is unlikely to encourage them to spend more on increasing supplies, especially when Democrats and investors have spent the last few years pushing for lower carbon emissions, industry experts said.

The industry has favored Republicans in U.S. elections for decades.

Ed Hirs, an energy economist at University of Houston, said Biden’s open vilification of the oil industry represented an “old playbook” that rarely works and only ensures the two sides refuse to talk.

“I have not seen this much vitriol since the 1970s,” Hirs said.

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Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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