Author: Perez Clark
President Biden has said he intends to call on Congress to begin considering new tax penalties for oil and gas manufacturers inflating prices during the gasoline price hike, which may obstruct the Democratic Party’s midterm prospects.
Biden to Float Windfall Tax on Energy Producers
On Monday (Oct.31), President Biden accused oil companies of “profiting from the war” as he raised his view of imposing a windfall levy on energy-producing companies if they don’t begin boosting their domestic output.
This windfall tax – which Democrats have been pursuing for over a decade without success has received increased attention among Congress members after local gasoline prices spiked to over $5 in Summer.
Senator Ron Wyden, Biden supporter and Oregon Democrat leading the tax-imposing Finance Committee, has suggested imposing a surtax on energy companies with a profit margin of over 10%.
Why Is Biden Pursuing The Windfall Tax
One White House official confirms that Biden’s windfall tax scheme is intended to press oil and gas producers to invest earnings into lowering costs for American citizens at the pump.
“My team will consult Congress to investigate the options available to us and every other American,” Mr. Biden said. “It’s high time these companies stop profiteering from the ongoing war and give the American people a break while still fulfilling their responsibilities to the U.S,”
President Biden took direct aim at one company, ExxonMobil. The oil giant generated over $19.5m, more than anticipated, in Q3 alone. He called out the corporation for providing shareholders with massive dividends and stock buybacks out of its revenue record instead of investing in local production that would benefit American citizens.
Biden could also request Congress to withdraw a particular group of tax incentives awarded to the industry, including the deduction of specific drilling expenses, which allows energy companies to deduct the costs like labor, repairs, and site preparation.
“Oil companies are recording higher-than-expected record profits and claiming to be innovative,” he said. “However, their profits are nothing more than windfalls off war, windfalls coming from the brutal fight that’s destroying Ukraine and ravaging the lives of millions worldwide.”
The Fault In Mr. Biden’s Plan
Oil trade organizations are raising awareness about the implications of President Biden’s, stating that a windfall levy would pressure fuel and domestic energy production at a time when the U.S govt should be encouraging more of it.
“Instead of boasting about price declines and sharing the blame for price hikes, the Biden administration should tackle the demand and supply crisis leading to price hikes and energy challenges,” said Mike Sommers, American Petroleum Institute President, and Chief Executive Officer.
Critics of Biden’s plan explain that a “windfall tax ‘will deter producers from making further investments, which is essential for combating falling supply and maintaining low prices.
The cause and effect of steadily rising energy costs on inflation have begun unraveling as Democrats brace their prospects for the oncoming midterm elections. The final vote will determine whether the party gets to maintain the majority share of the House and Senate populations.
Mr. Biden urges these companies to invest more resources into local production for the next few months. However, Chevron Corp., Total Energies SE, and Exxon Mobil Corp are getting ready to provide shareholders with about $100 in buybacks and dividends, according to numbers compiled by Bloomberg.