Biden Claims Oil Companies Are ‘War Profiting’ As He Introduces Windfall Tax
US President Joe Biden has accused oil companies of “cashing in” on Russia’s invasion of Ukraine, threatening them with a windfall tax law if they don’t increase production.
His comments came days later oil and gas producers including ExxonMobil and Chevron reported huge profits, and about a week before crucial midterm elections in which the price of gasoline has forced fellow Democrats to turn to the defense.
“In a time of war, any company that makes such a historic windfall has a responsibility to act outside the narrow interests of its executives and shareholders,” Biden said Monday night.
“They have an opportunity to do this by lowering prices for consumers at the gas station. If they don’t, they will pay more tax on their excess profits and face other restrictions.”
This was announced by the largest US oil company Exxon record quarterly net income nearly $20 billion on Friday. Rival Chevron earned $11.2 billion, just shy of the previous quarter’s record profits.
“Their profits are a windfall from war — a windfall from a brutal conflict that is ravaging Ukraine and harming tens of millions of people around the world,” Biden said.
The president said his administration would work with Congress to formulate potential policy responses. “It’s time for these companies to end their military speculation, fulfill their responsibilities in this country, give the American people a break, and do a very good job at it.”
Biden has repeatedly urged manufacturers to use their profits to invest in increased production. But instead, Wall Street forced oil companies to return money to shareholders.
U.S. gasoline prices hit a record high of more than $5 a gallon this summer. They have fallen since then, but remain more than 60 percent higher than when Biden took office amid strong oil consumption and global supply constraints.
High gas prices have become a political liability for Democrats ahead of next week by-electionswhere the president’s party risks losing control of both houses of Congress.
Any legislation to impose new taxes on the oil industry faces little chance, especially in a closely divided Senate. Democratic lawmakers previously floated the idea of a windfall tax on oil company profits, an idea that has been coolly met by the oil industry.
The American Petroleum Institute, a lobbying group, described the president’s remarks as “campaign rhetoric” and said any tax increase could backfire.
“Oil companies don’t set prices — global commodity markets do,” said Mike Somers, executive director of the American Petroleum Institute. “Raising taxes on American energy is discouraging investment in new manufacturing, which is the exact opposite of what is needed.”
Exxon Chief Executive Darren Woods said on Friday: “There has been a discussion in the US about our industry returning a portion of our profits directly to the American people. In fact, that’s exactly what we’re doing with our quarterly dividend.”
The administration has taken steps to lower fuel prices, including record releases from the US Strategic Petroleum Reserve. Biden said that the plan to replenish reserves at a price of 67-72 dollars per barrel will reduce prices and give oil companies confidence in further drilling.