In an effort to lower gas prices, Joe Biden cautioned oil corporations on Monday that failing to reinvest their extra earnings in raising production will result in a “higher tax” on those profits. In a speech on Monday afternoon, Biden said of the businesses, “They have a responsibility to act in the interest of their consumers, their communities, and their country, to invest in America by boosting production and refining capacity.”
Just over a week before the midterm elections, he said in remarks from the White House, “If they don’t, they’re going to pay a higher tax on their excess earnings and face additional restrictions.” Biden cannot levy a tax on businesses by himself; a new law must be approved by Congress. He promised to consider his options while collaborating with the lawmakers.
Following the release of high third-quarter results from ExxonMobil, Chevron, and Shell, he made these remarks. In his remarks, the president mentioned both Exxon and Shell by name.
Since it now takes at least 10 Republican votes to end a filibuster in the Senate, legislation would have a difficult route even in a Congress controlled by Democrats. Republicans are expecting for GOP majorities in both chambers following the midterm elections.
After Russia’s invasion of Ukraine and Western and American sanctions against Moscow, a major oil producer, gas prices skyrocketed earlier this year. Biden and his allies have attempted to place the responsibility for the high pricing on both the industry and Russian President Vladimir Putin.
In addition to the conflict, analysts have blamed this year’s high gas prices on a resurgence in demand following the pandemic, refinery closures, and power outages.
On Monday, the national average for gas prices was $3.76 per gallon, which is a slight decrease from the $3.79 per gallon they were a week earlier. Even though many people are still suffering because of that price, it has decreased significantly from its peak in June, when it was $5.02 per gallon.
After declining due to a drop in demand during the epidemic, U.S. oil output has increased.
An independent government statistics organization, the Energy Information Administration, predicts that in 2023, the nation will produce an average of 12.4 million barrels per day, breaking the previous high production mark set in 2019. The average is expected to be 11.7 million barrels per day this year.
In the event that fuel prices drop once more soon, producers have also demonstrated some reluctance to make what may be a dangerous investment in new drilling. Major corporations have recently tried to give earnings back to their shareholders by repurchasing their own stock.
On Monday, the oil industry slammed Biden’s remarks, arguing that higher taxes would actually reduce production.
In contrast to what is required, raising taxes on American energy deters investment in new production. President of the American Petroleum Institute Mike Sommers stated in a written statement that American families and companies are turning to Congress for answers rather than campaign bluster.
Many progressives applauded Biden’s remarks because they have long advocated for taxing energy firms’ “windfall” earnings.
According to a statement from Lauren Maunus, advocacy director for Sunrise Movement, “We’re happy to hear President Biden’s support for a Windfall Profits Tax to hold oil and gas firms accountable.” This is the cause the Democrats ought to have supported all year.