Biden to suggest new tax on oil companies amid windfall profits

President Biden will float a new tax on oil and gas companies in a speech on Monday after companies reported another quarter of extremely high profits amid spiking gas prices.

A White House official told The Hill that Biden will call on oil and gas companies to invest their profits in “in lowering costs for American families and increasing production.” 

If they don’t do so, the president will call on Congress to consider “requiring oil companies to pay tax penalties and face other restrictions,” the official said via email. 

The official did not use the phrase “windfall tax,” but the president appears to be targeting the companies’ profits after Exxon Mobil, Chevron and Shell reported major profits from July through September.

The speech comes as the Biden administration and Democrats have sought to blame oil and gas companies for high gasoline prices. 

Prices peaked earlier in the year — with gasoline reaching $5 per gallon in June. They remained high in the third quarter of the year, staying above $4 per gallon through July and into August. 

The strain at the pump is considered to be one of the biggest issues for voters as the country grapples with inflation.

A new tax on oil and gas companies is unlikely to pass through Congress, even one with Democratic majorities in the House and Senate. It would need the support of at least 10 Republicans in the Senate to overcome a filibuster.

But embracing the calls to hit oil companies could benefit Biden and Democrats politically.

Rep. Ro Khanna (D-Calif.), a big proponent of a windfall tax, expressed excitement about the prospects in a written statement to The Hill. 

“Senator [Sheldon] Whitehouse [D-R.I.] and I have been calling for a windfall profit tax on Big Oil for months and I’m thrilled to see President Biden publicly consider this approach,” Khanna said. 

“I’ve had a number of private conversations with White House officials and I hope they will act to help lower prices at the pump and send money back to hardworking Americans,” he added.

Reports of Biden’s comments were met with pushback from industry players like Jeff Eshelman, CEO of the Independent Petroleum Association of America, who called the plans “deeply flawed.”

“It’s time for the President to stop playing the blame game as Election night approaches and instead help support American oil and gas workers to increase supply here in the United States,”  Eshelman said in a statement.

This story was updated at 2:29 p.m.