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WASHINGTON—President Biden called on Congress to penalize oil-and-gas companies if they don’t use their profits to help lower energy costs for consumers, ratcheting up his criticism of the fossil-fuel industry ahead of next week’s midterm elections.
“Their profits are a windfall of war,” Mr. Biden said Monday at the White House. “At a time of war, any company receiving historic windfall profits like this has a responsibility to act beyond the narrow self-interest of its executives and shareholders.” World energy prices have risen in the aftermath of Russia’s invasion of Ukraine.
The president said his advisers would work with Congress to pass legislation to ensure oil companies “pay a higher tax on their excess profits and face other restrictions” if the companies didn’t take action to help consumers.
The proposal will face hurdles in Congress, especially if Republicans win majorities in one or both chambers in the midterms. Polls indicate Republicans are favored to take the House, but control of the Senate remains up for grabs.
Exxon Mobil Corp., the largest U.S. oil company, late last week reported a profit of nearly $20 billion in the third quarter, its most lucrative period ever.
Photo:
Brandon Bell/Getty Images
Mr. Biden’s approval ratings have been hampered by high prices for energy, among other things, ahead of the midterms. U.S. gasoline prices hit a record national average of about $5 a gallon in early June, then slid lower for months. In recent weeks, prices have stopped their rapid descent, with the U.S. average at $3.76 a gallon, according to AAA.
The White House has for months been weighing endorsing a proposal to tax what the president and his advisers call the windfall profits of oil and gas companies, according to administration officials. A group of progressive Democrats introduced legislation earlier this year that would impose a per-barrel tax equivalent to 50% of the difference between the current price of crude oil and the average price between 2015 and 2019, the lawmakers said in a statement summarizing the bill.
The American Petroleum Institute, an oil and natural gas industry trade group, criticized the president’s remarks. “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,” said Mike Sommers, the group’s president.
Mr. Biden’s comments Monday marked his latest rhetorical attack on the oil- and-gas industry. In response to high energy prices, Mr. Biden has released tens of millions of barrels of oil from the Strategic Petroleum Reserve, and he has called on the Federal Trade Commission to investigate whether oil-and-gas companies are participating in illegal conduct aimed at keeping gasoline prices high. Oil industry officials have called the president’s request for an FTC investigation an unwarranted distraction.
Mobil Corp., the largest U.S. oil company, reported Friday a profit of nearly $20 billion in the third quarter, its most lucrative period ever and nearly matching that of tech giant
Apple Inc.
Meanwhile, its closest rival,
Chevron Corp.
, posted its second-largest quarterly profit ever, of $11.2 billion. Both companies benefited from sustained high commodity prices.
The companies didn’t telegraph any plans to increase spending on oil or fuel production beyond the plans they had previously laid out.
Exxon Chief Executive
Darren Woods
last week said policies floated by the Biden administration, including a windfall-profit tax and restrictions on fuel exports, would have “significant long-term negative consequences.”
In a conference call with analysts Friday, Mr. Woods said such policies would hamper the oil industry, but Exxon would retain its competitive edge because of its diversified business and large footprint.
Exxon is investing capital at a faster clip than its peers, he said, pointing to a 250,000 barrel-per-day expansion of oil-refining capacity coming early next year to a Gulf Coast facility, and its increased oil production this year in the Permian Basin of New Mexico and West Texas.
“We recognize the pain that high prices cause,” Mr. Woods said. “Unfortunately, the market that we’re in today is a function of many of the policies and some of the narrative that’s floated around in the past.”
In a television interview last week, Chevron CEO
Mike Wirth
called a potential windfall profit tax shortsighted and said it would send a negative signal to American frackers.
“Typically, if you want less of something, you tax it,” Mr. Wirth said. “If you want more of something, you tend not to tax it.”
The American Fuel & Petrochemical Manufacturers, an oil-refining trade group, said a windfall-profit tax likely would dissuade U.S. oil producers from pumping as much oil and gas as they have been, raising prices at the pump.
“A windfall profit tax might make for good sound bites, but as policy, it’s bad for consumers,” said the group’s CEO,
Chet Thompson.
Write to Andrew Restuccia at [email protected] and Collin Eaton at [email protected]
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