Would Biden Windfall Tax on Excess Oil Profits Benefit Consumers in Any Way? – GOBankingRates
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President Joe Biden threatened to impose a windfall profits tax on the nation’s biggest oil and gas companies as a way to lower prices at the pump, but it’s uncertain when or even if such a move will see the light of day.
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The president accused the oil and gas industry of “war profiteering” during a media gathering at the White House on Monday. His comments came on the heels of another stellar quarter for big oil firms Exxon Mobil, Chevron and Shell, each of which produced record or near-record profits even as gasoline prices remain historically high.
The president urged the industry to use some of those profits to either expand their oil production or return it to consumers through lower gas prices, The New York Times reported.
“If they don’t, they’re going to 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. 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.”
Biden’s comments came just ahead of the Nov. 8 midterm elections and were seen by some as a way to redirect consumer anger over high gas prices away from the administration’s energy policies and toward the oil and gas industry. Economic and inflation worries remain two of the top priorities among voters heading to the polls, the Los Angeles Times reported.
Republican lawmakers were quick to accuse Biden of using the windfall tax threat as a political tool.
“Desperately trying to salvage the midterm elections, now he’s proposing another dangerous policy that will increase energy prices and energy poverty while making America more vulnerable to foreign countries for our daily energy needs,” U.S. Rep. Kevin Brady (R-Texas), the top Republican on the House Ways and Means Committee, told The Times.
Oil industry officials also pushed back against Biden, accusing him of trying to win political points for his party even as gas prices continue to fall from record highs.
“The Biden administration should get serious about addressing the supply-and-demand imbalance that has caused higher gas prices and created long-term energy challenges,” Mike Sommers, president of the American Petroleum Institute, told The Times.
But the oil industry is unlikely to get much sympathy from consumers who continue to pay historically high prices at the pump. The national average gas price was $3.758 a gallon as of Nov. 1, according to AAA — down from $3.800 a month ago but up from $3.402 a year ago. The all-time high of $5.016 a gallon was set on June 14, 2022.
Meanwhile, Exxon Mobil last week logged record third-quarter net income of $19.66 billion, Fortune reported, while Chevron posted $11.23 billion in profits — close to the record it set in the second quarter. Shell had a similarly robust quarter.
Using windfall taxes to encourage gas companies to lower prices would be a welcome gift to consumers ahead of the holiday season, when many will be traveling. That might be a long shot, however.
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Congress would have to approve such a measure. And as The New York Times noted, Congress is not currently in session and would be very unlikely to support a windfall tax should Republicans win one or both houses in the midterms.
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