Biden threatens oil companies with “higher taxes” if they don’t increase production

President Biden warned Monday that oil companies could face a “higher tax” on their excess profits if they don’t reinvest in increasing production to lower prices at the pump.

“They have a responsibility to act in the interests of their consumers, their community and their country and to invest in America by increasing manufacturing and refining capacity,” Biden said in a speech on the companies Monday afternoon.

“If they don’t, they pay a higher tax on their excess profits and face other restrictions,” he added in the White House remarks just over a week before the midterm elections.

Biden cannot unilaterally impose a tax on corporations; he would need a new law to pass Congress. He vowed to work with lawmakers to consider his options.

His comments come after ExxonMobil, Chevron and Shell reported high result in the third quarter. The President reviewed both Exxon and Shell in his speech.

Legislation would face a difficult path even in a Democrat-held convention, since it would now take at least 10 GOP votes to break a Senate filibuster.

Republicans hope the midterm elections will deliver GOP majorities in both houses.

Gas prices rose earlier this year after Russia’s invasion of Ukraine and Western and US sanctions against Moscow, a major oil producer.

Biden and his allies have blamed Russian President Vladimir Putin for the high prices and have tried to pin the blame on industry as well.

Analysts have attributed this year’s high gas prices not only to the war, but also to a recovery in demand following the pandemic, as well as refinery closures and outages.

Gasoline prices on Monday averaged about $3.76 a gallon nationwide, down a few cents from a week ago when they were about $3.79 a gallon.

While that price is still causing pain to numerous consumers, it’s also a notable drop from June highs of $5.02 a gallon.

US oil production has risen after falling during the pandemic due to reduced demand.

The Energy Information Administration, an independent government statistics agency, projects that the country will produce an average of 12.4 million barrels per day over the next year in 2023, which would surpass record production set in 2019. It forecasts this year’s average will be 11.7 million barrels per day.

However, producers have also shown some reluctance to make a potentially risky investment in new wells if fuel prices fall again soon. In recent months, even large companies have tried to return profits to their shareholders by buy back their own shares.

The oil industry dismissed Biden’s comments Monday, saying more taxes would actually discourage production.

“Increased taxes on American energy discourage investment in new production, which is just the opposite of what is needed. American families and businesses are looking to lawmakers for solutions, not campaign rhetoric,” said Mike Sommers, president of the American Petroleum Institute, in a written statement.

Many progressives, who have long called for a tax on energy companies’ “windfall” profits, cheered Biden’s comments.

“We are thrilled to hear President Biden’s support for a windfall profits tax to hold oil and gas companies accountable,” said Lauren Maunus, advocacy director for the Sunrise Movement in a statement. “The Democrats should have worked for this all year.”

This story was updated at 5:33 p.m