President Joe Biden is apparently sick of watching oil companies rake in record profits while consumers pay big bucks at the pump. He threatened new windfall profit taxes against fossil fuel giants, and cautioned corporations to cease cashing in the war in Ukraine, in a Monday speech.
“It’s time for these companies to stop war profiteering, meet their responsibilities to this country, and give the American people a break,” Biden said in his impassioned remarks.
Gas prices initially spiked following Russia’s invasion of Ukraine in February. And though they’ve since fallen from their June peak of more than $5 per gallon, the U.S. average remains well above what it was this time last year, according to the Energy Information Administration. Meanwhile, fossil fuel giants like Exxon and Chevron have been reporting historically high profits.
Last week, ExxonMobil reported a quarterly profit of $19.7 billion—its largest ever, exceeding the previous record set just three months prior by $1.8 billion. And Chevron posted its second-highest ever quarterly profit at $11.2 billion, close behind its record of $11.6 billion earned between April and June 2022. The national average cost for a gallon of regular gas is $0.35 more than in November 2021.
“Oil companies’ record profits today are not because they’re doing something new or innovative. Their profits are a windfall of war — the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe,” the President added.
In lieu of lowering prices at the pump, or say, actually following through on their multitude of promises to reduce emissions, lots of oil companies have re-routed their record profits into stock buybacks and dividend increases that reward investors. Five oil executives cashed out nearly $100 million in stock shares in the weeks immediately following the start of the Ukraine conflict.
“Here’s why it matters: If these companies were making average profits they’ve been making by refining oil over the last 20 years instead of the outrageous profits they’re making today and if they passed the rest on to the consumers, the price of gas would come down around an additional 50 cents,” said Biden.
And clearly it also matters because in the process of filling their coffers to bursting, fossil fuel companies are sentencing the whole planet to catastrophic climate change. If the oil giants are so flush with funds, then why not move some of that money towards the absolutely necessary (and rapidly accelerating) transition to renewable energy?
Unfortunately, that wasn’t quite the takeaway message that Biden centered. Instead, he called on the likes of Exxon, Chevron, and Shell to use their excess revenue to “increase production and refining capacity.” Yikes. And he started off so strong. To clarify, the last thing we need from a climate perspective is for these companies to put even more time and money into drilling and manufacturing oil. Yet even so, they already are. American oil production is up 4% from last year, according to The New York Times. Lack of supply and fossil fuel infrastructure is less the issue than outright greed.
But, even amid the mixed messaging, the President at least called for a degree of corporate accountability. If these fossil fuel producers don’t adjust to ensure that consumer prices reflect their earnings reality, Biden threatened “they’re going to pay a higher tax on their excess profits and face other restrictions. My team will work with Congress to look at these options that are available to us and others.” Though Congress isn’t currently in session and any legislation regulating oil companies would likely struggle to pass through Senator Joe Manchin’s iron grip on the Senate.
Presidential approval ratings seem to track with gas prices. Over the past year, people have been happier with Biden when fuel cost falls and vice versa. So it’s not surprising that he’s honing in on gasoline and heaping blame on fossil fuel companies as the midterm elections get underway. And he’s at least half right—oil companies are clearly benefiting from the war in Ukraine and global instability. Yet the President can’t have it both ways. If Biden wants to be taken seriously on climate, he can’t claim to acknowledge the growing danger in one breath, and then demand that oil companies ramp up production in the next.