Shares of Chevron (NYSE: CVX) cooled off this morning, sinking 5.4% within the first 20 minutes of the market’s opening.
Chevron’s CEO just wrote a letter to President Joe Biden, and the president isn’t happy. Oil prices, meanwhile, are taking a pretty sharp hit today.
In a letter addressed to oil and gas giants last week, including Chevron, Biden partly blamed refiners’ high profit margins for the sky-high price of gasoline at the pump, and called on refiners to take immediate action and increase production and supplies of gasoline, diesel, and other refined products to help bring down prices.
CEO Michael Wirth responded yesterday. While highlighting how Chevron’s oil and gas production hit all-times highs in 2021 and how production in Permian Basin alone is expected to rise 15% this year, Wirth also blamed the Biden administration, saying it was criticizing and vilifying the oil and gas industry.
Wirth also called for a dialogue and urged the Biden administration to change its approach and provide “clarity and consistency” on important policies related to federal lands and the ability to build infrastructure, among other things.
Biden has been quick to dismiss Chevron’s stand, though, and called Wirth “mildly sensitive” at a press conference while rebuffing any claims that there’s no oil to drill to boost production.
Meanwhile, Biden also reportedly plans to urge Congress to suspend the federal gasoline tax for the next three months. With fears of a recession already looming large, these factors combined to send oil prices lower on Wednesday. As of this writing, Brent crude was down 4%.
More than the spat between Biden and Wirth, though, falling oil prices and Biden’s intent to cool down oil and gas prices hurt investor sentiment in energy stocks today.
Thursday is an important day as representatives of energy companies, including Chevron, meet Energy Secretary Jennifer Granholm. Chances are, they might be asked to increase production. Any decision to that effect could send oil prices even lower. In other words, you should continue to expect volatility in stocks like Chevron in the coming days.