The president claimed on Monday that U.S. oil companies were “war profiteering” and threatened that his administration could impose a windfall tax on the industry if domestic oil production does not increase, despite previous actions against the oil industry like halting the Keystone XL Pipeline.
Biden made the remarks to the press in the Roosevelt Room at the White House, briefly commenting on the supposed relationship between record-high gas prices and Russia’s military operation in Ukraine.
“Oil companies’ record profits today are not because they’re doing something new or innovative,” he alleged.
“Their profits are a windfall of war — the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe.”
Biden’s comments come as gas prices continue to inch downward from a record-high national average of $5.016 in mid-June. However, prices remain higher than one year ago and, along with nagging inflation, continue to punish American consumers.
While mainstream media characterizes Russia’s energy policies as a weaponization of energy exports, and Western nations sanction the country for annexing territories in Ukraine, some experts do not believe the war is the sole cause of high prices.
Todd Staples, president of the Texas Oil & Gas Association, told The Dallas Express:
“Our own American president has gone to other countries asking for foreign production while here at home he has canceled pipelines, delayed permits, removed federal acreage from being leased, and discouraged investment by suggesting oil and natural gas will not be needed. Elevated prices are directly tied to these actions.”
Biden called on oil companies to reinvest their existing profits into upping production levels to increase the country’s depleted domestic capacity.
The depletion was partly a consequence of the administration’s repeated drawing from the nation’s Strategic Petroleum Reserve, as previously reported in The Dallas Express.
“You know, at a time of war, any company receiving historic windfall profits like this has a responsibility to act beyond their [sic] narrow self-interest of its executives and shareholders,” stated the president.
He specifically targeted North Texas-based ExxonMobil in his remarks, citing its third-quarter profits of $19.7 billion, an all-time quarterly record for the company.
Biden doubled down later in the day, appearing to issue an ultimatum to the oil industry via a tweet:
“The oil industry has a choice. Either invest in America by lowering prices for consumers at the pump and increasing production and refining capacity. Or pay a higher tax on your excessive profits and face other restrictions.”
When asked by The Dallas Express about the repercussions of a windfall tax, Staples stated, “To even contemplate punitive measures like a windfall profits tax only further hurts the American consumer because it works against increased production by yet again discouraging needed investment dollars to expand domestic production.”
Economist Larry Summers also cautioned against a windfall tax on Twitter, warning that the move could backfire.
“I’m not sure [I] understand the argument for a windfall profits tax on energy companies. If you reduce profitability, you will discourage investment, which is the opposite of our objective,” he tweeted.
Such assertions bore out decades ago, as evidenced by a Congressional Research Service report that concluded that a windfall profits tax on the industry in the 1980s drove oil production down by roughly 8% and incidentally caused the country to become more dependent on foreign oil.
“Americans deserve energy security. It’s time our federal government treated oil and natural gas like assets, not liabilities,” stated Staples.