Biden accuses oil companies of ‘war profiteering,’ threatens windfall tax ahead of midterms
President Biden threatened Monday to propose a special “windfall” profits tax on oil companies he said were “war profiteering” — as gasoline prices continue to drag on Democrats going into next week’s midterm elections.
Biden, speaking for just five minutes at the White House, didn’t identify a specific tax rate and said voters would hear more from him about the idea after the election.
“Oil companies’ record profits today are not because of doing something new or innovative. Their profits are a windfall of war — a windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe,” Biden charged.
“You know, at a time of war, any company receiving historic windfall profits like this has a responsibility to act beyond their narrow self-interest of its executives and shareholders,” he added.
“They have a responsibility to act in the interest of their consumers, their community and their country to invest in America by increasing production and refining capacity because they don’t want to do that, they have the opportunity to do that, lowering prices for consumers at the pump. You know, if they don’t, they’re going to pay a higher tax on their excess profits and face other restrictions.”
Biden alleged higher than usual corporate profits could explain about $0.50 per gallon of consumer costs.
“My team will work with Congress to look at these options that are available to us and others,” the president went on.
“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 said. “The American people are going to judge who is standing with them and who is only looking out for their bottom line.”
Biden’s efforts to tamp down gas prices before the elections — including by pressuring Saudi Arabia to delay a production cut and releasing oil from the US Strategic Petroleum Reserve — have outraged Republicans who say the president is trying to manipulate prices for his own gain while shifting blame for higher costs. Critics have repeatedly noted Biden’s own efforts to curtail oil production last year as part of an enivronmental agenda, including an attempt to impose a moratorium on new oil and gas leases on federal land, canceling the Keystone XL oil pipeline project from Canada into the US and banning oil drilling in the Arctic National Wildlife Refuge.
Republican National Committee Chairwoman Ronna Romney McDaniel said in a statement after the speech that “Joe Biden is lying.”
“Since his first day in office, Biden has attacked American energy with the help of congressional Democrats,” she said. “Americans know that under Biden and Democrats, gas prices are higher, groceries are more expensive, and real wages are down. The best way to lower gas prices is to vote Republican.”
“Haven’t American families suffered enough from President Biden’s damaging attack on American-made energy?” asked Rep. Kevin Brady (R-Texas), the ranking member of the House Ways and Means Committee. “Desperately trying to salvage the mid-term 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.”
Brady blasted the proposal as “a [Jimmy] Carter-era tax hike” and added that “the nonpartisan Tax Foundation has warned, the last time the U.S. implemented a windfall profit tax in 1980 ‘it resulted in lower domestic production and higher reliance on imports.'”
Although oil-company profits are higher than usual, they’re also just one facet of across-the-board hikes in consumer prices this year amid the highest sustained inflation since 1981. As of last month, average US consumer costs were up 8.2% over one year.
Biden called out some oil companies by name.
“One by one major oil companies reported record profits, not just a fair return… I mean profits so high it’s hard to believe,” he said.
“Last week, Shell announced it made $9.5 billion in profits for the third quarter… that’s almost twice as much as it made in the third quarter of last year…. then along came Exxon. Exxon’s profits for the third quarter were $18.7 billion — one quarter, $18.7 billion, nearly triple what Exxon made last year and the most in its 152-year history.”
Biden added, “In the last six months, six of the largest oil companies have made more than $100 billion — $100 billion in profits in less than 200 days. That’s not bad.”
Exxon, the largest US oil company, said its third-quarter earnings were $5.3 billion higher than in the third quarter of 2021 “due to stronger industry refining margins, positive derivative mark-to-market effects and higher volumes.” In the third quarter, Exxon spent $3.7 billion paying dividends to shareholders and $4.5 billion on buybacks that can increase stock value.
The president’s threat of a windfall tax is unlikely to ever happen due in part to the 60-vote threshold to pass most legislation in the Senate, as well as the narrow margin of Democratic control of the House. Republicans have to win a net of just five House seats to regain the majority after four years out of power — and needs to flip a net of just one seat to regain the Senate.
Polls show that economic woes are a liability for Biden and his Democratic allies. For example, a CNBC survey released this month found that just 16% of voters said the economy was either “excellent” or “good” and 59% said they expect a recession.
That poll also found just 40% of voters approve of Biden’s handling of the economy, though that figure was up 10 percentage points from an abysmal 30% in July.
In addition to high inflation, the Federal Reserve’s interest rate hikes this year are increasing the costs of consumer borrowing, including for mortgages.
The average cost of a gallon of regular gas in the United States is $3.76, lower than all-time highs over $5 in June, but still up significantly from $3.40 at this time last year, according to AAA data.
Biden announced this month that he would release another 15 million barrels of oil from the US Strategic Petroleum Reserve in December — for a total of 180 million barrels from the SPR this year — after the Saudi-led OPEC+ cartel snubbed his outreach and moved to cut production by 2 million barrels per day.
House Republicans floated Biden’s possible impeachment next year for asking Saudi Arabia to postpone OPEC+ cuts until after the election — with No. 3 House Republican Rep. Elise Stefanik (R-NY) calling it a “very egregious, inappropriate and illegal action by the president.”
