Nov 1, 2022
In the wake of scorching inflation and Russia’s war in Ukraine, major gas companies like Chevron and Exxon Mobil are raking in profits. And it’s got President Joe Biden hot under the collar.
“Record profits today are not because they’re doing something new or innovative. The profits are a windfall of war,” Biden said in remarks at the White House on Monday, accompanied by Treasury Secretary Janet Yellen and Energy Secretary Jennifer Granholm.
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With gas prices still elevated, and an expensive winter ahead, Biden says he’s ready to force these oil companies to act — but while his words for these companies may be strong, he may not have the power to back them up.
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Biden doesn’t mince his words
Biden has been waging a battle with oil companies over the last few weeks, but he escalated it Monday when he called on them to “act beyond their narrow self-interest,” to “invest in America by increasing production and refining capacity” on behalf of “their consumers, their community and their country.”
And if they don’t? Biden warns they’re going to face “a higher tax on their excess profits and … higher restrictions.”
The president didn’t elaborate on what those restrictions might be, but promised his administration would work with Congress to evaluate all the available options.
“It’s time for these companies to stop war profiteering, meet their responsibilities in this country and give the American people a break,” Biden added.
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Oil companies fire back
While gas has dropped from a record high of over $5/gallon in June, it’s still currently hovering around $3.76. And that, along with a dangerously low oil supply and a dwindling diesel stockpile is clearly weighing on Biden.
But oil companies argue they’re already contributing to the cause. Exxon Mobil’s CEO Darren Woods took a moment during the company’s third-quarter earnings call on Oct. 28 to address Biden. “There has been discussion in the U.S. about our industry returning some of our profits directly to the American people,” Woods said. “That’s exactly what we’re doing in the form of our quarterly dividend.
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The president didn’t take kindly to that, tweeting his response a few hours later: “Can’t believe I have to say this but giving profits to shareholders is not the same as bringing prices down for American families.”
Any taxes would face an uphill battle
Biden appears to be proposing a “windfall” tax to redistribute profits to American consumers still paying out the nose at the pump. And with the hotly anticipated midterm elections just a week away, no doubt he expects it to be a popular proposal.
But even with Biden’s backing, there’s no guarantee he’ll be able to pass a new corporate tax. For that, he’d need support from Congress and with a Senate divided in half between Republicans and Democrats, that seems unlikely. And with Republicans expected to potentially take the majority in the House in next week’s elections, it seems like an even longer shot.
Still, the president isn’t prepared to back down yet. Last Friday, Exxon and Chevron, two of the country’s biggest oil companies, reported hefty profits for the fourth consecutive quarter. That same day, in a briefing from the White House, Biden pointed out that six of the largest companies “made $70 billion in profit” in just 90 days.
Appalled that all that money was going back to their shareholders and executives, Biden issued a promise: “I’m going to keep harping on it. [These companies] talk about me picking on them, they ain’t seen nothing yet. I mean it. It outrages me.”
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Sigrid is a deputy editor on the Moneywise team, where she has also worked in a number of editing and reporting roles. She has 5 years experience writing about personal finance and takes great pride in demystifying complex financial issues and finding the personal in personal finance topics.
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