US President Joe Biden said Monday, Oct.31, he plans to seek tax penalties for oil companies unless they invest their record profits in lowering consumer costs and boosting production, criticizing their “war profiteering.”
His comments came days after oil giants ExxonMobil and Chevron reported bumper earnings, reflecting how a surge in crude prices after Russia’s invasion of Ukraine has boosted the industry.
Natural gas costs have also risen, due to Europe’s mobilization to offset lost imports from Russia.
“Their profits are a windfall of war,” Biden told reporters on Monday, referring to energy businesses’ earnings.
Biden said companies have a “responsibility to act” beyond the narrow self-interest of executive shareholders, and to help consumers by raising production and their refining capacity.
If businesses do not act to lower prices, “they’re going to pay a higher tax on their excess profits and face other restrictions,” Biden said, adding that officials will work with Congress to look into the issue.
While oil and gas prices have recently cooled, they are still much higher than before Russia launched its invasion of Ukraine in February.
Hefty profits reported earlier by TotalEnergies and Shell have also reignited a European debate on windfall profits taxes.
“It’s time for these companies to stop war profiteering… give the American people a break and still do very well,” Biden said.
Beyond international developments, the energy sector has seen heightened refining margins, in part due to operational issues at some plants.
The strong margins have translated into higher gasoline prices, a sensitive issue for American voters as the November 8 midterm elections draw close.
On Saturday, Oct. 29, Biden tweeted that oil companies made billions in profits this quarter and were “using these record profits to pay out their wealthy shareholders instead of investing in production and lowering costs for Americans.”
“It’s unacceptable,” he wrote, adding that it was time for oil giants to help lower prices for consumers.
American families have been squeezed by persistently high inflation, propelling the issue to the top among voter concerns.
In the third quarter, ExxonMobil scored a near tripling of profits to $19.7 billion, a company record, while Chevron profits surged 84 percent to $11.2 billion.
ExxonMobil Chief Executive Daren Woods, in response to criticism that the industry should return profits to Americans, said on Friday that this was what it was doing in the form of its quarterly dividend.
But this drew a response from the president, who said in another tweet that “giving profits to shareholders is not the same as bringing prices down for American families.”
Frustration and anger with negative economic issues like rising inflation is often directed at the president and the party in power.
Average prices at US pumps topped $5 per gallon in June, hitting an all-time high.