{"id":1721053,"date":"2022-11-02T06:01:05","date_gmt":"2022-11-02T10:01:05","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1721053"},"modified":"2022-11-02T08:19:51","modified_gmt":"2022-11-02T12:19:51","slug":"can-the-white-houses-battle-with-oil-companies-yield-any-results","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/can-the-white-houses-battle-with-oil-companies-yield-any-results\/","title":{"rendered":"Can the White House\u2019s Battle With Oil Companies Yield Any Results?"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcan-the-white-houses-battle-with-oil-companies-yield-any-results%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1721053&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p><em>News Analysis<\/em><\/p>\n<p>President <a href=\"https:\/\/www.theepochtimes.com\/t-joe-biden\">Joe Biden<\/a> recently accused <a href=\"https:\/\/www.theepochtimes.com\/t-oil-and-gas\">oil and gas<\/a> companies of \u201cwar profiteering\u201d as they post record profits amid soaring energy prices. He handed the fossil fuel industry an ultimatum: boost production or face a windfall tax on record profits.<\/p>\n<p>This comes as crude oil prices are coming off a 2.5 percent gain in October, with a barrel of West Texas Intermediate (WTI) topping $88 on the New York Mercantile Exchange.<\/p>\n<p>Ahead of the midterm elections, the Biden administration and Democrats in Washington have been hammering home the message that it is corporate greed that is leading to pain at the pump and broader inflationary pressures. But this is not the first time the Democrats have flirted with such a tax.<\/p>\n<p>This past spring, Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.) <a href=\"https:\/\/www.whitehouse.senate.gov\/news\/release\/as-oil-companies-rake-in-cash-economists-and-environmental-groups-endorse-whitehouses-windfall-profits-tax\">submitted legislation<\/a> that would force oil and gas companies to owe a per-barrel tax equal to 50 percent of the difference between the present price and the pre-pandemic average price per barrel between 2015 and 2019. Revenues from the plan would have been used to fund another stimulus check.<\/p>\n<p>\u201cWhile the United States severs economic ties with Putin to protect our national security, I am committed to doing everything in my power to limit the fallout for Rhode Islanders who were already getting squeezed before this happened,\u201d said Whitehouse. \u201cWe\u2019ve seen this script before, and we cannot allow the fossil fuel industry to collect a massive windfall once again by taking advantage of an international crisis.\u201d<\/p>\n<p>The <a href=\"https:\/\/www.congress.gov\/bill\/117th-congress\/house-bill\/7061\">Big Oil Windfall Profits Tax Act<\/a> was introduced, but nothing else has transpired since March.<\/p>\n<h2>Is a Windfall Tax a Good Idea?<\/h2>\n<p>More recently, Robert Reich, the former Labor Secretary and Berkeley professor, has repeatedly wrote in tweets that \u201ccorporations are jacking up prices, blaming inflation, and padding their margins.\u201d<\/p>\n<p>\u201cBig Oil is using the cover of inflation to line their pockets. Shell raked in $9.45 billion in profits last quarter and has announced $4 billion in stock buybacks,\u201d he noted in a\u00a0<a href=\"https:\/\/twitter.com\/RBReich\/status\/1587153200288649217\">tweet<\/a> on Monday. \u201cFor once, let\u2019s take aim at an actual driver of inflation and enact a windfall profits tax on Big Oil.\u201d<\/p>\n<p>Nobel laureate economist Joseph Stiglitz had previously supported Sen. Whitehouse\u2019s tax on energy giants\u2019 windfall profits. He\u00a0<a href=\"https:\/\/www.msn.com\/en-xl\/money\/markets\/stiglitz-says-oil-firms-did-nothing-to-deserve-windfall-profits\/ar-AA11UtUG?ocid=finance-verthp-feeds\">told<\/a> Agence France-Presse in September that they \u201cdidn\u2019t do anything\u201d to deserve the huge earnings.<\/p>\n<p>\u201cSometimes we have this discussion: Are profits exploitation or are profits the just desserts of having invested more, putting out more effort?\u201d he said. \u201cThis is a particular case where there is no debate. It is very clear that the oil companies didn\u2019t do anything to deserve the high oil prices. It was [Russian President Vladimir] Putin\u2019s invasion of Ukraine that was at the source of the problem.\u201d<\/p>\n<figure id=\"attachment_4834935\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/11\/01\/Larry-summers-1200x813.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-full wp-image-4834935\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/Larry-summers-scaled.jpg\" alt=\"Epoch Times Photo\" width=\"5680\" height=\"3850\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4834935\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/Larry-summers-scaled.jpg\" alt=\"Epoch Times Photo\" width=\"5680\" height=\"3850\" \/><\/noscript><\/figcaption><\/a> Larry Summers, former Treasury Secretary, attends the Allen &#038; Company Sun Valley Conference on July 08, 2022 in Sun Valley, Idaho. (Kevin Dietsch\/Getty Images)<\/figure>\n<p>Yet dissent was public. Former Treasury Secretary Larry Summers, for example, was not so quick to endorse a windfall tax on the energy sector, warning that it would \u201cdiscourage investment.\u201d<\/p>\n<p>\u201cI\u2019m not sure I understand the argument for a windfall profits tax on energy companies. If you reduce profitability, you will discourage investment, which is the opposite of our objective,\u201d Summers <a href=\"https:\/\/twitter.com\/LHSummers\/status\/1587385595986321408\">stated<\/a>. \u201cIf it is a fairness argument, I don\u2019t quite follow the logic, since even with the windfalls Exxon has underperformed the overall market over the last five years.\u201d<\/p>\n<p>Indeed, the energy sector lagged the rest of the market after it hit a peak in the summer of 2014. From June 2014 to March 2020, the S&#038;P Oil &#038; Gas Exploration &#038; Production Select Industry Index, for example, tumbled by 90 percent. By comparison, the broader S&#038;P 500 Index rallied about 65 percent.<\/p>\n<p>Even Secretary of the Treasury Janet Yellen <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2022-06-09\/yellen-rejects-idea-corporate-greed-is-to-blame-for-inflation\">dismissed the idea<\/a> that corporate greed is behind inflation. In June, she told an audience at a New York Times event that the laws of supply and demand are \u201clargely driving inflation,\u201d although she conceded that price-to-cost margins have accelerated.<\/p>\n<p>Republicans, however, were prompt to oppose the stern suggestion, accusing President Biden\u2019s so-called windfall profits tax would cut production, raise prices on families and businesses, and make the United States more dependent on foreign oil.<\/p>\n<p>\u201cHaven\u2019t American families suffered enough from President Biden\u2019s damaging attack on American-made energy? Desperately trying to salvage the midterm elections, now he\u2019s proposing another dangerous policy that will increase energy prices and energy poverty while making America more vulnerable to foreign countries for our daily energy needs,\u201d said Rep. Kevin Brady (R-Texas) in a statement. \u201cWe\u2019ve seen this mistake before. This is a Carter-era tax hike that slashed production while making the United States more dependent on foreign oil. This couldn\u2019t come at a worse time for American families suffering under 40-year high inflation, who are on track to pay the highest prices to keep their homes warm in 25 years.\u201d<\/p>\n<h2>1980 All Over Again?<\/h2>\n<p>The last time the United States imposed a similar levy was in 1980, and that caused an 8 percent reduction in domestic output and a greater reliance on imports, according to the <a href=\"https:\/\/www.everycrsreport.com\/reports\/RL33305.html\">Congressional Research Service (CRS)<\/a>.<\/p>\n<p>Garrett Watson, a senior policy analyst at the Tax Foundation, does not think taxing high-profit margins is a wise public policy pursuit if the objective is to incentivize more energy production.<\/p>\n<p>\u201cHigher profits is the market signal for firms to take advantage and increase their supply,\u201d Watson told The Epoch Times.\u00a0Aside from the volatility of oil prices, the companies now \u201chave to deal with the tax system\u201d coming after them, he said.<\/p>\n<p>\u201cIt\u2019s going to further disincentivize production, which is the wrong thing we want to be doing.\u201d<\/p>\n<p>European markets that have experimented with this policy have not produced enough evidence to suggest this tax initiative boosts production or leads to savings for consumers, he added.<\/p>\n<p>In the end, according to American Petroleum Institute president and CEO Mike Sommers, global commodities markets set prices, not oil and gas companies.<\/p>\n<p>\u201cRather than taking credit for price declines and shifting blame for price increases, the Biden administration should get serious about addressing the supply and demand imbalance that has caused higher gas prices and created long-term energy challenges,\u201d he said in a <a href=\"https:\/\/www.api.org\/news-policy-and-issues\/news\/2022\/10\/31\/biden-remarks-on-profits-and-prices\">statement<\/a>.<\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-andrew-moran\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/WEB_AndrewMoran.jpeg\" alt=\"Andrew Moran\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of &#8220;The War on Cash.&#8221;<\/p>\n<\/p><\/div>\n<\/div>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-emel-akan\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/15ef0812da90bd74_ttl7dayCNO_WEB_EmelAkan-1.jpg\" alt=\"Emel Akan\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Emel Akan writes about business and economics. Previously she worked in the financial sector as an investment banker at JPMorgan. She graduated with a master\u2019s degree in business administration from Georgetown University.<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>News AnalysisPresident Joe Biden recently accused oil and gas companies of \u201cwar profiteering\u201d as they post record profits amid soaring energy prices. He handed the fossil fuel industry an ultimatum:<\/p>\n","protected":false},"author":1,"featured_media":1721056,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1721053","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1721053","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1721053"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1721053\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1721056"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1721053"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1721053"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1721053"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}