Biden floats new taxes while accusing Big Oil of "windfall of war"
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US President Joe Biden speaks on manufacturing at the SRC Arena and Events Center of Onondaga Community College in Syracuse, New York on October 27, 2022. (Photo by MANDEL NGAN/AFP via Getty Images)
President Biden on Monday urged Congress to impose new taxes on oil companies if the industry doesn't take more action to lower fuel prices and boost domestic output.
Why it matters: Biden's remarks at the White House come a week before midterm elections in which elevated gasoline prices jeopardize Democrats' performance at the ballot box.
What they're saying: "One by one, major oil companies reported record profits," Biden said Monday in an address from the White House. "I mean profits so high it's hard to believe."
- "Rather than increasing investments in America, or giving American consumers a break, their excess profits are going back to their shareholders and they're buying back their stocks."
- "Record profits per day are not because they are doing something innovative. Their profits are a windfall of war, windfall from the brutal conflict that's ravaging Ukraine and hurting tens of millions of people around the globe," he added.
- "I think they have a responsibility to act in the interest of their consumers, their community and their country," he added. "If they don't they're going to pay a higher tax on their excess profits and face other restrictions. My team will work with Congress to look at these options that are available to us and others."
The Washington Post, citing people familiar with the matter, reports that the "windfall profits" tax would fall on the largest producers and hit earnings "that are in excess of their typical annual profits."
- The Associated Press first reported on the matter.
Reality check: New taxes on oil companies are unlikely to make it through Congress, and the headwinds will grow if, as appears likely, Republicans win control of one or both chambers following the midterm elections.
What we don't know: What the "other restrictions" Biden referenced could mean exactly.
- Biden officials have not ruled out seeking to restrict exports of gasoline and other petroleum products.
The other side: Industry officials say the drumbeat of White House criticisms over prices and earnings in recent months don't accurately capture how global commodity and fuel markets work.
- They note that producers do not set oil prices — the biggest part of gasoline costs — in global markets or dictate retail fuel prices.
- Jeff Eshelman, CEO of the Independent Petroleum Association of America, called Biden's Halloween remarks "clearly a ‘trick’ to distract American families from the administration’s misguided energy policies because they’re not seeing any ‘treats’ of relief at the gasoline pump."
The big picture: Gasoline prices have come down significantly since hitting a peak average of $5 per gallon in June, but remain elevated. The current nationwide average for regular gasoline is $3.76 per gallon, per AAA.
Editor's note: This story has been updated with additional details throughout.
