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

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

President Biden warned on Monday that oil companies will face a “higher tax” on their excess profits if they do not invest in increasing production to lower prices at the pump.

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

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

Biden cannot unilaterally impose a tax on companies; it would need a new law to be passed by Congress. He promised to work with the legislature to consider his options.

His comments come after reports from ExxonMobil, Chevron and Shell high earnings in the third quarter. The president also checked Exxon and Shell in his speech.

The legislation would face a tough road even in a Democratic-held Congress, since at least 10 GOP votes would now be needed to break a filibuster in the Senate.

Republicans are hoping the midterms will deliver majorities in both chambers.

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

Biden and his allies blamed Russian President Vladimir Putin for the high prices, and tried to shift the blame to the industry.

Analysts attributed this year’s high gas prices not only to the war, but also to the recovery of demand after the pandemic, as well as refinery closures and downtime.

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

While that price still causes pain for many consumers, it’s also a significant drop from June’s highs of $5.02 per gallon.

U.S. oil production rose after falling amid reduced demand during the pandemic.

The Energy Information Administration, the government’s independent statistics agency, predicts next year the country will produce an average of 12.4 million barrels per day in 2023, surpassing the record high output of 2019. This year’s average is estimated to be 11.7 million barrels per day.

However, producers have also shown some aversion to what could be a risky investment in new drilling if fuel prices fall again soon. In recent months, major companies have also sought to return profits to their shareholders buy back their own shares.

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

“Raising taxes on American energy discourages investment in new generation, which is exactly the opposite of what is needed. American families and businesses are looking to lawmakers for solutions, not campaign rhetoric,” American Petroleum Institute President Mike Sommers said in a written statement.

Many progressives, who have long called for a tax on the “unsavory” profits of energy companies, welcomed Biden’s comments.

“We are thrilled to hear President Biden’s support for a nonrefundable corporate tax to hold oil and gas companies accountable,” Lauren Maunus, director of advocacy for the Sunrise Movement, said in a statement. “That’s what Democrats should have stood for all year.”

This story was updated at 5:33 p.m



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