National Economic Council Deputy Director Bharat Ramamurti told a Roosevelt Institute panel on Thursday that the Biden administration is considering a congressional proposal to place a windfall tax on oil and gas as prices at the pumps continue to skyrocket.
“We are very much open to any proposal that would provide relief to consumers at the pump,” Ramamurti said, according to Reuters.
“There are a variety of interesting proposals and design choices on a windfall profits tax,” Bharat Ramamurti added. “We’ve looked carefully at each of them and are engaging in conversations with Congress about design.”
Ramamurti’s comments came just a day after he told reporters that Biden’s plan to combat inflation would include raising taxes on America’s wealthiest and the country’s big businesses. Consumer prices were up 8.3% in April from the year prior, according to the Labor Department.
“What the president has done and made clear is that we are dedicated to doing everything we can to stop and push back on that Russian aggression, but it’s going to cause pain for American consumers in the short term, and gas prices are one unfortunate example,” Ramamurti said.
15 Democratic-aligned senators and several Democrats back the congressional proposal in the House of Representatives. It would charge large oil companies a quarterly tax on domestically produced or imported crude oil.
The revenue from the new tax would then be redistributed to consumers below a certain income level in the form of a tax rebate, amounting to a few hundred dollars a year.
“One thing you want to be aware of when you are looking at those types of proposals is how is it going to affect supply as well,” Ramamurti said. “I don’t think that’s an insurmountable hurdle, but it is an important question at a time when there’s clearly a supply issue.”
The bill is co-sponsored by Senator Elizabeth Warren (D-MA), who announced the proposal on MSNBC in March.
“I’m co-sponsoring a bill on windfall profits tax,” Warren said. “We get it, supply and demand, prices go up, but profit margins should not go up. That’s just oil companies gouging.”
“Big oil companies are making higher profits off Putin’s war,” the Senator tweeted.
Big oil companies are making higher profits off Putin’s war in Ukraine — while families pay higher prices at the pump. It’s time for billionaire corporations to pay their fair share & invest in clean energy. We can reduce our reliance on fossil fuels & reduce costs for families.
— Elizabeth Warren (@SenWarren) March 8, 2022
Exxon Mobil, the largest oil producer in the U.S., made $5.48 billion in the first quarter of this fiscal year and has announced that it expects to increase its stock buybacks through 2023 to $30 billion.
Last week, the UK announced a 25% windfall tax on oil and gas producers and a 15 billion pound ($18.9 billion USD) stimulus package for households.
However, the U.S. bill does not appear so far to have the necessary support in Congress to reach the president’s desk.
“I don’t think it will happen in the U.S., mainly just the way the Senate’s divided,” John Hess, chief executive of oil producer Hess Corp (HES.N), said at an industry conference on Thursday. “I don’t think Joe Manchin would vote for it.”
Some believe a windfall tax on large oil producers would cause fuel prices in the U.S. to soar.
The “windfall tax on oil would guarantee $200 oil,” tweeted Dan Rosenblum, a financial analyst at Sharkbiotech.com.
windfall tax on oil would guarantee $200 oil
— Dan Rosenblum (@sharkbiotech) June 2, 2022
The national average for a gallon of gasoline in the United States hit $4.761 on Friday, up from $4.599 the prior week, according to AAA.
