A White House official is strongly criticizing Big Oil for banking huge profits in the wake of Russia’s invasion of Ukraine, which the administration has blamed for soaring gas prices.
“It’s outrageous that oil and gas companies are able to take advantage and make four times the profits that they made when there wasn’t a war,” Bharat Ramamurti, deputy director of the National Economic Council, told CNN in a phone interview.
Ramamurti’s comments represent one of the sharpest critiques yet from the White House as it tries to address what has become its main political problem ahead of the 2022 midterm elections. Gas prices, which were already rising ahead of the start of the war at the end of February, have reached record highs and experts are warning that there is no end in sight for climbing prices.
He pointed out that the top five oil companies raked in $35 billion in profits during the first quarter alone as energy prices spiked during the onset of Russia’s war in Ukraine. Ramamurti appeared to be referring to ExxonMobil, Chevron, BP, Shell and ConocoPhillips, all of which reported sharp increases in profits last quarter. Shares of Exxon, the largest US oil company, closed at a record high on Wednesday.
The White House economist did not rule out administration support for a windfall profit tax that progressives are pushing for.
President Joe Biden also used his first in-person late night appearance to draw scrutiny on Big Oil.
“Everybody says, ‘Oh, Biden won’t let them drill,’” Biden said on “Jimmy Kimmel Live” Wednesday night. “They have 9,000 drilling sites that they already own that are there. They’re not doing it. You know why? Because they make more money not drilling and buying back their own stock.”
Major oil companies are, in fact, ramping up supply, just not quickly enough to drive down prices. The industry also lost enormous sums of money in 2020 when oil prices briefly crashed below zero for the first time ever as Covid-19 caused travel to grind to a virtual standstill.
Still, today’s massive profits come as families are struggling with record-high gasoline prices, which are on the verge of topping $5 a gallon nationally for the first time.
Energy Secretary Jennifer Granholm told CNN last month that Big Oil is “prioritizing profit for their shareholders over helping their citizens,” a point she reiterated to CNN’s Jake Tapper on Wednesday.
This situation has sparked calls from Democrats for a windfall profit tax on Big Oil as a way to help people who can’t afford to drive or heat their homes. Such a tax was imposed last month by the United Kingdom on the “extraordinary” profits of British oil and gas companies.
Asked if the White House will support a windfall profit tax, Ramamurti left the door open.
“We review all of those proposals. We are open to lots of different ideas,” he told CNN. “We realize there is a problem here we need to tackle.”
Critics of windfall profit taxes argue that handouts to consumers will support demand at a time when supply can’t keep up and discourage investment.
The American Petroleum Institute, the largest lobby representing the oil-and-gas industry, told CNN in a statement that raising taxes on the industry will discourage investment in new production – “exactly the opposite of what needs to happen.”
“It’s unfortunate that some policymakers continue to be more focused on scoring political points with tried-and-failed policies rather than advancing solutions that could actually address the factors behind rising prices,” said Frank Macchiarola, the API’s senior vice president of policy, economics and regulatory affairs.