Biden accuses oil companies of ‘war profiting’ and threatens windfall tax

The current national average of $3.76 a gallon is about three pennies lower than it was a month ago and about $1.25 below the June peak, but still well above $2.39 when Biden took office, According to AAA.

The issue recently erupted when Saudi Arabia led OPEC+ to cut production by up to two million barrels of oil per day ahead of the midterm elections, a move Biden administration officials said. It is considered treason From a private understanding to increase supplies rather than the other way around.

A windfall profit tax would levy a selective tax on the production of domestic oil producers. The tax rate will be set by Congress, which may vary between independent producers and major corporations. This would be the first windfall profit tax in the United States in more than three decades, but since earlier this year 15 European countries have proposed or enacted such taxes, including Britain, Italy and Spain, According to the Tax Foundation.

Research from President Jimmy Carter, Congress imposed a windfall profit tax in 1980 after a sharp increase in oil prices prompted by the OPEC embargo. Lawmakers have been trying to offset the industry’s big tax cuts, including a depletion allowance for old wells with burdensome deposits and a set of discounts for drilling.

But domestic production declined and dependence on foreign oil increased, while revenue expectations from the windfall tax turned out to be overly optimistic. Congress abolished the tax in 1988 after oil prices fell.

Industry executives said Biden’s proposal to revive the tax would not increase supply. “It’s a terrible idea, a small thought,” said Patrick Montalban, president of Montalban Oil and Gas, a North Dakota and Montana producer. This will take away from the exploration and production of oil and gas locally. Simply. overall policy.

Democrats who have lobbied Biden to consider such a tax praised his statement. “It’s time for Congress to stand up to the big oil companies and give consumer relief, rather than buy back corporate stock and bonuses,” said Senator Sheldon Whitehouse of Rhode Island, who introduced windfall profits tax legislation.