Biden warns of windfall tax on ‘war profiteering’ oil companies

US president criticises oil companies for making record profits amid the Russia-Ukraine war, warns of higher tax.

Joe Biden windfall tax
US President Joe Biden makes a statement about gasoline prices and oil company profits in the Roosevelt Room as US Treasury Secretary Janet Yellen listens at the White House in Washington, US, on October 31, 2022. [Leah Millis/Reuters]

US President Joe Biden has criticised oil and gas companies for recording big profits after crude prices surged following Russia’s invasion of Ukraine.

Biden, speaking ahead of the November 8 mid-term elections, warned that if leading oil companies do not invest some of their profits to lower costs for American consumers, they could face a windfall tax.

US rivals Chevron and ExxonMobil have reported profits in the range of $70bn this year, almost a three-fold increase from 2021.

Biden said on Monday the record profits were a “windfall from the brutal conflict that is ravaging Ukraine and hurting tens of thousands of people around the globe”.

“It’s time for these companies to stop war profiteering, meet their responsibilities in this country and give the American people a break and still do very well,” he said.

The president also issued a warning that companies could face “a higher tax on their excess profits and face other restrictions”.

With the mid-term elections a week away, Biden’s comments have been viewed as an attempt to address voters who have faced persistently high inflation.

Reporting from Washington, DC, Al Jazeera’s Rosiland Jordan said: “Republicans have been able to make inroads with voters this year because of the surge in energy prices, particularly in the cost of automotive fuel after the invasion of Ukraine by Russia”.

In July, the price of gasoline was more than $4.80 on average per gallon, according to the American Automobile Association. It has since fallen to $3.76 on average after Biden’s administration pulled 180 million barrels from the Strategic Petroleum Reserve earlier in the year.

Jordan said that “because the Biden administration knows that Americans look at the price of gasoline as a harbinger of how they are doing overall economically, this was a moment for the president to come out on Monday and say to voters that he is still working this problem”.

“This is exactly the type of leadership we’ve been waiting for from President Biden,” said Jamie Henn, a spokesman for the group Stop the Oil Profiteering.

“Big Oil has made nearly $300bn in excess profits this year by gouging us at the pump. A windfall profits tax can provide immediate relief by redirecting that money into the pockets of hardworking Americans.”

Industry groups have condemned the prospect of a windfall tax, with American Exploration & Production Council CEO Anne Bradbury saying it “would likely backfire by further driving up energy costs for American families and businesses.”

A windfall tax would have to be approved by Congress, where the Democrats have only narrow control of the House and Senate.

“So far, that legislation hasn’t picked up much traction, and because Congress won’t be back until the later part of November, it is unlikely you’ll see any positive movement on that legislation before the end of this year,” Jordan said.

Source: Al Jazeera and news agencies