Big Oil windfall tax proponents ‘encouraged’ by Biden letter

Congressional Democrats who have pushed for a windfall profits tax on oil companies said Wednesday that they’re encouraged by similar rhetoric coming from President Biden. 

Rep. Ro Khanna (D-Calif.), the House sponsor of one of two such bills, said on a press call that he was “encouraged by the president’s leadership on this, and we’ve had people in the White House say they’re considering the idea.” 

“The president has written a strong letter recently to the oil executives and become more vocal on the issue,” Khanna added. “So I see momentum for the idea.” 

In a letter this week, Biden called on oil executives to increase production of refined products, saying the industry’s historically high profits are “worsening the pain” caused by Russia’s invasion of Ukraine to energy markets. 

“Your companies and others have an opportunity to take immediate actions to increase the supply of gasoline, diesel, and other refined product you are producing and supplying to the United States market,” Biden wrote. 

Khanna called the idea of a windfall profits tax “common sense” and a “mainstream, reasonable proposal.” Although the progressive wing of the Democratic Party has spearheaded the proposals, he noted that British Prime Minister Boris Johnson’s Conservative government has imposed a similar tax in the United Kingdom.

“There’s no reason we can’t do this in the United States,” he said. “When we did something similar in 1980, it led to a decrease in prices, and actually an increase in production for the first few years in the 1980s. If you look at the graphs of the prices and production in the early 1980s, this argument of how it’s going to have a negative effect is just not true.” 

Rep. Jamaal Bowman (D-N.Y.) added that “we also have to be aware that corporate profiteering is happening across the entire economy,” noting his own introduction with Sen. Bernie Sanders (I-Vt.) of complementary legislation to impose a 95 percent emergency tax on “any big price-gouger.’ 

Congressional Democrats have repeatedly called for a windfall profits tax as gas prices have soared. The Biden administration, meanwhile, has pointed to a number of factors outside its direct control, including the war in Ukraine and oil companies’ failure to produce on 9,000 leases.

Updated at 1:53 p.m.