US President Joe Biden has threatened to seek a new windfall profits tax on major oil and gas companies unless they ramp up production to curb the price of gas at the pump. Photo / AP
US President Joe Biden has threatened to seek a new windfall profits tax on major oil and gas companies unless they ramp up production to curb the price of gas at the pump. Photo / AP
US President Joe Biden has threatened to seek a new windfall profits tax on major oil and gas companies unless they ramp up production to curb the price of gas at the pump, an escalation of his battle with the energy industry just a week before the midterm elections.
Thepresident lashed out against the giant firms on Monday (Tuesday NZT) even as several of them reported the latest surge in profits, which he called an “outrageous” bonanza stemming from Russia’s war on Ukraine. He warned them to use the money to expand oil supplies or return it to consumers in the form of price reductions.
“If they don’t, they’re going to pay a higher tax on their excess profits and face other restrictions,” Biden told reporters at the White House. “My team will work with Congress to look at these options that are available to us and others. It’s time for these companies to stop war profiteering, meet their responsibilities to this country, give the American people a break and still do very well.”
The president’s semi-embrace of new taxes on the energy industry heartened liberals in his party who have been pressuring him to take action for months. But it was more of a way of pressuring the oil firms than a realistic policy prescription for the new term given that Congress is not even in session and would be even less likely to approve such a measure if Republicans capture one or both houses in next week’s election.
Biden has been eager to redirect public anger over gas prices toward the oil companies and away from himself as Democrats try to overcome historical and popular headwinds to keep power on Capitol Hill. While the price at the pump has fallen significantly since topping out just above US$5 (NZ$8.58) a gallon over the summer, it remains much higher than when Biden took office and contributes to the overall inflation rate, which is at a four-decade high.
The president cast his case against the oil firms in terms that seemed clearly aimed at next week’s vote. “The American people are going to judge who is standing with them and who is only looking out for their own bottom line,” he said. “I know where I stand.”
Biden’s statement came just days after the oil giants reported another three months of flush coffers.
Republicans quickly fired back at the president, saying that he was refusing to accept responsibility for policies that they say discourage the energy industry from expanding capacity.
“Joe Biden is lying,” the Republican National Committee said in a statement. “Since his first day in office, Biden has attacked American energy with the help of congressional Democrats. Americans know that under Biden and Democrats, gas prices are higher, groceries are more expensive and real wages are down. The best way to lower gas prices is to vote Republican.”
Biden’s statement in the Roosevelt Room in the White House came just days after the oil giants reported another three months of flush coffers. Exxon brought in a record of nearly US$20 billion in profits for the third quarter of the year, 10 per cent higher than the previous quarter and its fourth consecutive quarter of robust earnings. Chevron reported US$11.2b in profits, just below the record it set the quarter before. European-based Shell and Total Energies similarly reported that their profits more than doubled from the same period a year ago.
The companies have used their profits in some cases for dividend increases and stock buybacks rather than pushing production, which could bring down the price of oil and therefore their profits. Exxon Mobil raised its dividend on Friday, citing a commitment to “return excess cash” to shareholders.
Biden has long been particularly sensitive to gas prices, which have been an important barometer for the public mood in recent months. As pump prices hit record highs over the summer, the president’s approval rating slid to new lows, but as gas costs came down over the following three months, his numbers improved. Likewise, according to polls, the rise and fall of gas prices is directly inverse to public feelings about whether the country is heading down the right track or wrong track
Ron Klain, White House chief of staff, is so attentive to the fluctuations that he checks the average price every day and often posts messages on Twitter pointing out when it dips further.
“If you are filling your gas tank this weekend, you are seeing one of the cheapest Saturdays of the year,” Klain tweeted on Saturday. “Gas prices continue to drop nationally,” he added on Monday morning.
The current national average of US$3.76 a gallon is about three pennies less than it was a month ago and about US$1.25 below the June peak, but still far above the US$2.39 it was when Biden took office, according to the AAA.
Windfall taxes, generally structured as one-time levies on firms enjoying a substantial if temporary rise in profits, have become a major policy debate elsewhere in the world. This year, 15 European countries have proposed or enacted such taxes, including Britain, Italy and Spain, according to the Tax Foundation.
