President Joe Biden spoke to reporters on Monday about a potential windfall tax on energy company profits unless they boost production. Biden called the massive surge in profits amongst gas and oil companies "outrageous" and accused the industry of profiting off of the war in Ukraine.
"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.
According to AAA, the average price Americans are currently paying at the pump is $3.76 per gallon, about $1.25 less than its $5 peak back in June. Just days before the midterm elections, Biden is prodding major gas companies to help further reduce the cost of gasoline at the pump.
"If they don't, they're going to pay a higher tax on their excess profits and face other restrictions," Biden said. "My team will work with Congress to look at these options that are available to us and others.
However, it's probable that Biden's windfall tax proposal is more of threat than a real policy position. After all, Congress won't be back in session until after the midterms, and a hypothetical Republican-controlled body isn't likely to approve such a tax.
Biden's statements come a few days after oil companies' most recent round of quarterly profit reports. The recent reports continued the yearlong trend of record-breaking profits.
During the three-month period reported, Exxon Mobil
"The American people are going to judge who is standing with them and who is only looking out for their own bottom line," Biden told reporters. "I know where I stand."
Republican lawmakers were quick to push back against Biden's statements, arguing that taxing energy companies more will only encourage them to decrease supply.
"Haven't American families suffered enough from President Biden's damaging attack on American-made energy?" asked Kevin Brady, a Texas Representative and top-ranking Republican on the Ways and Means Committee.
"Desperately trying to salvage the midterm 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 continued.
Unsurprisingly, oil companies also criticized Biden's proposal to increase their taxes.
"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," American Petroleum Institute trade group President Mike Sommers, said. "Today, the President is proposing 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."
Like Republican lawmakers, oil executives have also complained that investment in U.S. oil and gas would decrease if a windfall tax was introduced.
"It's going to take away from exploration and production of domestic oil and gas," president of Montalban Oil and Gas Patrick Montalban warned. "It's that simple. Total politics."
Over the past six months, six of the largest oil companies brought in more money than they saw during all of 2021. Rather than using those profits to increase production and potentially bring down prices, companies have put their profits towards stock buybacks and increased dividends for investors. Exxon Mobil recently said that a dividend increase it would be initiating was meant to "return excess cash" to company shareholders.
"Can't believe I have to say this but giving profits to shareholders is not the same as bringing prices down for American families," Biden tweeted last week.
If the proposal is actually considered, it wouldn't be the first time that Congress has passed a windfall tax. In 1980, President Jimmy Carter and Congress taxed oil companies for a sharp increase in profits caused by an OPEC embargo. Soon after, production fell, and imports of foreign oil increased. The tax also didn't bring in as much as expected.
