He reiterated his call for the oil industry to use the surging profits to increase its oil production and refining capacity, and said it was time they looked beyond “the narrow self-interest” of their executives and shareholders.
“If they don’t they are going to pay a higher tax on their excess profits and face other restrictions,” he said. “It’s time for these companies to stop war profiteering, meet their responsibility to this country, give the American people a break and still do very well.”
Oil majors Exxon Mobil, Chevron and Shell Oil alone reported quarterly profits last week totaling about $40 billion.
Biden did not endorse any specific proposal, which could frustrate Democrats in Congress who’ve proposed legislation months ago to tax the “windfall” profits of large oil and gas companies, only for the administration to hold back on declaring support for the idea. Democratic candidates running in swing states and districts have also deployed the tactic in their campaigns.
Instead, Biden said he’d consult with Congress on legislative options when it returns from recess after the election.
But business groups and the oil industry said the latest calls are a politically motivated attack on the sector that Biden has targeted since his campaign and won’t help bring down prices.
“Experience proves that adding new taxes to punish companies actually hurts consumers,” said Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce. “In this case, it will raise gasoline prices by removing the incentive to produce and refine more oil. To lower our energy costs we need a long-term energy strategy focused on boosting production, not finger-pointing.”
Biden and Democrats in Congress for months have called for oil and gas companies to invest more capital into expanding production rather than returning profits to shareholders through dividends and share buybacks. But they have found their appeals mostly ignored, and industry executives have been wary of committing to major new production plans given the volatility that has seen crude prices swing by more than $100 in the past three years.
U.S. crude oil futures prices climbed above $120 per barrel in the spring, boosting gasoline to a record high national average of $5.01 per gallon. Those pump prices averaged $3.76 a barrel on Monday, while crude was trading near $85.50 a barrel.
Democrats in the Senate and House, led by Sen. Sheldon Whitehouse of Rhode Island and Rep. Ro Khanna of California, introduced legislation this spring that would tax large oil companies for windfall profits and give the proceeds to consumers as a rebate.
“I’m thrilled to see President Biden publicly consider this approach,” Khanna told POLITICO in a statement Monday. “I’ve had a number of private conversations with White House officials and I hope they will act to help lower prices at the pump and send money back to hardworking Americans.”
Sen. Ron Wyden, chairman of the Finance Committee, introduced a bill this summer applying a 21 percent tax on the “excess” profits of large oil and gas companies with more than $1 billion in annual revenue.
Oil companies have defended their approach, saying their bumper profits are the result of a surge in oil and natural gas prices after Russia’s invasion of Ukraine scrambled global energy markets.
Energy analysts have dismissed Democratic accusations that oil companies are keeping prices high through anti-competitive behavior, noting that previous gasoline price gouging investigations over recent decades have not proved any wrongdoing.