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In an address to the nation on Monday, President Joe Biden raised the specter of a windfall tax on energy companies that refuse to boost domestic production to bring down oil and gas prices which will weigh on midterm elections on November 8th.
With earnings season in full force, Biden was responding to a barrage of reports of America's biggest oil companies bringing in record-high profits.
In his Monday statement, which aired at 4:30 p.m. EST, Biden said that oil companies were not earning windfall profits because of their innovation; rather, they were earning windfall profits on the back of a “brutal” war launched by Russia in Ukraine.
The U.S. president said he would work with Congress to impose tax penalties on oil company profits but offered no further details during the short briefing, and did not take questions from reporters.
Earlier in the day, a White House official had told the Associated Press that “The president will again call on oil and gas companies to invest their record profits in lowering costs for American families and increasing production”.
“And if they don’t, he will call on Congress to consider requiring oil companies to pay tax penalties and face other restrictions,” the unnamed official told AP ahead of the live briefing.
Major oil companies enjoyed soaring profits for Q3 2022, with Exxon reporting record-setting earnings on Friday at $19.7 billion, beating analysts estimates by some $4 billion. Shell came in $9.5 billion–its second-highest earnings to date, and Chevron also saw its second-highest earnings at $11.2 billion, double what it brought in for the same quarter of 2021.
Gasoline prices at the pump have fallen for the third consecutive week; however, the White House maintains that prices have not fallen enough. National averages for a gallon of gasoline in the United States fell to $3.72 on Monday, according to GasBuddy data.
Also on Monday, government figures showed that U.S. oil output had risen to nearly 12 million barrels per day in August. That figure represents the highest level of oil production in the United States since before the COVID-19 pandemic, Reuters reported.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com