(The Center Square) – Democrats on a U.S. House subcommittee claimed that increased gas prices are because of American oil and gas companies “price gauging” and “war profiteering.” Such a claim is misguided at best, U.S. energy industry leaders responded.
The hearing this week of the Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce came after U.S. senators led by Sen. Sheldon Whitehouse, D-RI, introduced a bill to further tax large oil companies to “curb profiteering … and provide Americans relief at the gas pump.”
The “Big Oil Windfall Profits Tax” bill would add a 50% per barrel tax on the difference between crude oil prices and the average between 2015 and 2019. Large oil companies that produced or imported at least 300,000 barrels per day in 2019 would be subject to the added tax.
“Big Oil’s” billions in profits should be returned “to the hardworking people who paid for it at the gas pump,” Whitehouse said.
The proposed quarterly tax would apply to domestically produced and imported barrels of oil. Revenue would go to consumers through a quarterly rebate, phased out for single filers who earn more than $75,000 in annual income and joint filers who earn more than $150,000. At $120 a barrel, the tax would raise approximately $45 billion a year, the senators project. Single filers would receive roughly $240 and joint filers $360, a year, according to the bill.
Gas prices reached a seven-year high and inflation a 40-year high last year, well before Russia invaded Ukraine. Last November, when gas prices had already reached record highs, President Joe Biden asked the Federal Trade Commission to launch an investigation into the oil and gas industry, blaming it for high gas prices while the U.S. continued to import oil and refined products from Russia.
In his first year in office, Biden halted and restricted oil and gas leases offshore and on federal lands, stopped construction of the Keystone Pipeline, and redirected U.S. policy to import more oil from Organization of the Petroleum Exporting Countries (OPEC+), including Russia, instead of bolstering American oil and gas production.
While U.S. production on federal lands was stifled, in 2021, the U.S. imported 8.47 million barrels per day of crude oil and refined products, of which 8% came from Russia, according to the U.S. Energy Information Agency. After Russia invaded Ukraine, Biden turned to OPEC+, Iran and Venezuela to increase supply, and again blamed U.S. companies for increased gas prices.
Larry Behrens at Power the Future told The Center Square the latest tax plan is “insane.”
“Increasing taxes while families are already struggling with record prices can only be described in one word: insane,” he said. “As if record high prices aren’t enough, this proposal would raise the cost on each barrel of oil produced in the United States and further undermine American energy independence. These politicians need to explain to the American people why they want to raise taxes on oil while they stood silent as Joe Biden approved Putin’s pipeline but canceled one here at home.”
Kathleen Sgamma, president of Western Energy Alliance, points out that oil companies are already taxed on their profits.
“There’s no evidence that companies are price gouging, but there’s plenty of evidence that this president has been hostile to the oil industry from his first day in office and intentionally suppressed American production,” she told The Center Square. “While there’s inflation throughout the economy, Democrats like to go after oil companies even while they’re begging Venezuela and Saudi Arabia for more production.
“Nobody was talking about helping oil companies when prices were extremely low,” she added. Democratic lawmakers “like to talk about companies making record profits but ignore the huge losses in 2020. Companies returned dividends to shareholders last year to make up for the losses their shareholders experienced in 2020. Saying that returning dividends to investors is bad for American consumers is a fundamental misunderstanding of a free market, particularly since investors include millions of small individual investors and just about any worker with a pension fund or 401k.”
Texas Independent Producers & Royalty Owners Association President Ed Longanecker said that U.S. oil and gas companies don’t control the market; they’re subject to it like everyone else.
The Biden administration could easily lower costs by expediting permits, lifting the federal leasing ban and creating “a more stable regulatory environment that provides certainty to producers and investors,” he said. “Overburdensome regulations, increased taxes and anti-oil and natural gas rhetoric will only exacerbate high energy prices and raise costs for American consumers.”
Texas energy leaders and 25 governors have also called on the Biden administration to prioritize domestic production. Republican senators, led by two from North Dakota, also introduced a bill requiring the Biden administration to prioritize energy independence.
By Bethany Blankley | The Center Square contributor
