President Joe Biden on Monday warned major oil and gas companies that they may face additional taxes if they don’t boost domestic production, as his administration aims to combat high gas prices just days before the midterm elections.
While the president did not explicitly name the proposal as such, a so-called “windfall tax” is one levied against an entity or industry during times of large, unexpected profits, typically attributed to a widespread geopolitical or natural disturbance. Governments may choose to target certain industries with windfall taxes in order to “encourage companies to reduce prices for the benefit of the consumer,” per the Tax Foundation.
Biden on Monday said some of the nation’s largest oil and gas companies are benefitting from the ongoing war in Ukraine, which caused global energy prices to skyrocket, though the cost has settled somewhat in recent months.
“Oil companies’ record profits today are not because of doing something new or innovative,” Biden said from the White House. “Their profits are a windfall of war. A windfall from the brutal conflict ravaging Ukraine and hurting tens of millions of people around the globe.”
Last week, Exxon Mobil broke records with its profits in the third quarter, raking in $19.66 billion in net income, and Chevron had $11.23 billion in profits, almost reaching the record profits it attained in the prior quarter. According to a White House official, ExxonMobil, Chevron, Shell, BP, ConocoPhillips and TotalEnergy earned $100 billion over the last two quarters alone, more than the profits recorded by the companies throughout all of 2021.
High prices at the pump have exacerbated inflation and have taken a toll on Biden and Democrats’ standing among voters.
“Give me a break: Enough is enough,” Biden said Monday.
“Any company receiving historic windfall profits like this has a responsibility to act beyond the narrow self-interest of its executive shareholders,” he continued, calling on oil companies to increase domestic production and refining capacity and to lower prices for consumers at the pump.
“If they don’t, they’re gonna pay a higher tax on their excess profits and face other restrictions,” Biden said. “My team will work with Congress to look at these options that are available to us, and others.”
Congress would have to approve any additional taxes on the energy producers — which would be a tall order in the current Congress where Democrats have narrow control of the House and Senate, and even less likely should Republicans retake one or both chambers on Nov. 8.
Americans have struggled with painfully high gasoline prices in recent months, paying more than $4.80 on average for a gallon of regular at the beginning of July, according to AAA. They’ve since fallen to $3.76 on average nationally, but the White House says they should be lower, given declines in global oil prices over the same period.
“Can’t believe I have to say this but giving profits to shareholders is not the same as bringing prices down for American families,” Biden tweeted on Friday.
Biden has been critical of energy companies profits since at least June, when he complained publicly that “Exxon made more money than God this year.”
The president on Monday further criticized energy executives for their outsized profits, saying in part: “Rather than increasing their investments in America, or giving American consumers a break, their excess profits are going back to the shareholders and to buying back their stock so the executive pay is going to skyrocket.”
The White House on Monday released data showing ExxonMobil, Chevron, Shell, BP, ConocoPhillips and TotalEnergy spent over $50 billion in the last six months to buy back shares and pay out dividends.
Last week, ExxonMobil CEO Darren Woods appeared to address Biden’s concerns directly, as reported by Bloomberg’s coverage of the company’s earnings conference call.
“There has been discussion in the U.S. about our industry returning some of our profits directly to the American people,” the outlet reported Woods said last week. “That’s exactly what we’re doing in the form of our quarterly dividend.”
That answer did not appease the president, who tweeted on Friday: “Can’t believe I have to say this but giving profits to shareholders is not the same as bringing prices down for American families.”
Biden is not the first to propose taxing oil and gas companies reporting record profits this year.
In March, Rep. Ro Khanna, D-Calif., introduced the Big Oil Windfall Profits Tax Act, which aimed to “impose a windfall profits excise tax on crude oil and to rebate the tax collected back to individual taxpayers.” The bill has yet to receive a vote in the House, and its future is even less likely should Republicans retake the chamber in next week’s midterm elections.
A number of Republicans in both the House and the Senate have already voiced their opposition to a potential windfall tax on the energy industry, pointing to Biden’s own policies as reason for the high prices at the gas pump.
