Oil Industry Group Slams Biden’s Threats of Windfall Taxes, Restrictions

President Joe Biden speaks outside of Independence National Historical Park in Philadelphia, Pa., on Sept. 1, 2022. Jim Watson/AFP via Getty Images

The industry group representing America’s oil industry slammed President Joe Biden’s recent statements threatening windfall taxes and restrictions on oil companies.

Biden attacked major U.S. oil companies at a White House press conference on Oct. 31, instructing them to invest more into boosting domestic oil production and to lower consumer prices—or else face possible restrictions.

He also accused the energy industry of war profiteering, calling their recent earnings a “windfall of war” in Ukraine, and said that they have a “responsibility to act in the interest of their consumers, their community, and their country.”

The president issued the threat to levy a windfall tax penalty on oil companies a week before the midterm elections.

The White House used as leverage last week’s record quarterly profit reports by major American oil companies to pressure the industry, as high energy prices cause concern for the Democrats.

However, any new taxes on oil profits would need congressional approval, but the Democrats only control both houses of Congress by a slim margin.

Biden Issues a Warning Over Gas Prices and Industry Profits

“My team will work with Congress to look at these these options that are available to us and others,” Biden said. “It’s time for these companies to stop war profiteering, meet their responsibilities in this country, and give the American people a break and still do very well.”

The president demanded that oil and companies direct their extra profits into increasing production and refining capacity and suppress gas prices at the pump.

“If they don’t, they’re going to pay a higher tax on their excess profits and face other restrictions,” said Biden.

He concluded by saying that energy companies will “hear more” on the matter “when the Congress gets back.”

However, if the Republicans win back control of Congress, the Democrats will have little time to pass tax restrictions on the industry before the next term begins in January.

“The oil industry has a choice. Either invest in America by lowering prices for consumers at the pump and increasing production and refining capacity or pay a higher tax on your excessive profits and face other restrictions,” stated Biden’s twitter feed.

Oil Industry Shoots Down Threats of a Windfall Tax on Profits

The American Petroleum Institute (API) responded to Biden with a press release of its own regarding his remarks on gas prices and industry sanctions.

“Rather than taking credit for price declines and shifting blame for price increases, 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,"  said Mike Sommers, API’s president and CEO.

“Today, the president proposed to raise taxes on the U.S. natural gas and oil industry that is competing globally to produce the fuels Americans need every single day.”

“Oil companies do not set prices—global commodities markets do. Increasing taxes on American energy discourages investment in new production, which is the exact opposite of what is needed. American families and businesses are looking to lawmakers for solutions, not campaign rhetoric,” Sommers added.

Exxon Mobil’s third quarterly report saw it earn $112.07 billion in revenue and $19.7 billion in net income, with a respective increase of roughly 52 and 191 percent year over year.

Biden particularly singled out Exxon Mobil for its massive third quarter earnings. “Exxon made more money than God this year,” the president exclaimed back in June.

He slammed the company for using record profits to provide shareholders with hefty dividends and stock buybacks without investing in production upgrades that would ease pump prices.

Biden called the recent earnings report “outrageous,” stating that gas prices would be lower by about 50 cents if the excess profits raked in by the oil industry were passed onto consumers.

Meanwhile, Chevron saw its third quarterly profits rise by 84 percent, to $11.23 billion, while its revenue jumped 49 percent, to $66.64 billion. And Shell reported $9.45 billion in adjusted earnings, up from $4.13 billion in the same period in 2021.

The Politics of Big Oil and Foreign Dependency

The API also said that a windfall tax on profits would actually decrease domestic energy production and increase reliance on foreign oil, referring to a study by the Congressional Research Service.

The congressional report noted that the tax on oil profits from 1980 to 1988, when it was finally repealed, boosted dependency on foreign oil and tanked U.S.-based production by as much as 8 percent.

The Democrat-controlled House passed a bill in May that authorized the Federal Trade Commission to punish energy companies for price gouging, and created a new unit at the agency to monitor fuel markets; but the bill has stalled in the Senate.

Earlier this month, the president announced the release of 15 million barrels of crude oil from the Strategic Petroleum Reserve, after already releasing about 165 million barrels since the beginning of the year, for a total of 180 million by the end of 2022.

He has also promised to refill the reserve once oil prices hit below $70 a barrel.

The national average price for regular-grade gas was $3.758, according to the American Automobile Association (AAA).

Gas prices fell from $3.80 a month ago, but remains higher than last year’s $3.401.

AAA reported that average national gas prices reached a record high of $5.016 in mid-June.