Ahead of US Midterm Elections, Blaming High Inflation... Biden Warns Oil Companies of Windfall Tax

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] U.S. President Joe Biden warned that he would impose a so-called 'windfall tax' on oil companies that are making astronomical profits from high oil prices if they do not lower product prices and increase production. This is interpreted as a kind of political card to ease the inflation blame that could sway voters' sentiments a week before the midterm elections.

On the 31st (local time), President Biden urged oil companies that have made huge profits to return benefits to consumers by expanding production or lowering prices, saying at the White House, "Otherwise, they will pay more taxes on excess profits and face other restrictions."

President Biden criticized the profits made by oil companies since Russia's invasion of Ukraine as 'war profiteering.' ExxonMobil recently disclosed third-quarter operating income of a staggering $19.7 billion, three times that of the previous year. Chevron and Shell also earned around $10 billion each. He said, "The scale of profits in the oil industry is outrageous," and criticized, "Despite record profits, they have not kept their promises to help the American people."

He also emphasized, "Oil companies must stop pursuing 'war profiteering' and fulfill their responsibilities to the nation," adding, "We will work with Congress to review these (taxation) options."

This is an extension of President Biden's stance, who has openly criticized oil companies over high gasoline prices. According to the American Automobile Association (AAA), as of this day, the average gasoline price in the U.S. stands at $3.762 per gallon. Although this is lower than the average of around $5 per gallon in June, it remains high compared to the same period last year ($3.401). On the 29th, Biden also criticized on Twitter, "Oil companies made tens of billions of dollars in profits in the third quarter but are using it to reward wealthy shareholders instead of investing in production and reducing costs for Americans," adding, "This is unacceptable."

Especially, imposing a windfall tax just about a week before the November midterm elections is seen as a political judgment that inflation concerns will influence voters' decisions. Gasoline prices are particularly felt by Americans and are still considered a major factor fueling overall inflation in the U.S. Ultimately, it is judged that it will be difficult to gain momentum in the midterm elections without addressing concerns surrounding oil prices. It can also be read as a calculation to divert the public's anger over inflation, including high gasoline prices, from the government to major oil corporations. President Biden emphasized on this day, "The American people will judge who stands with them and who only pursues their own interests."

However, with the Republican Party expected to take control of the House in this election, it is anticipated that the windfall tax will be difficult to realize. Even in the current congressional structure where the Democratic Party controls both the Senate and the House, 60 votes are needed in the Senate to overcome a filibuster (a legal obstruction of legislative progress). In other words, at least 10 Republicans must vote in favor. However, current local polls suggest that the Republicans are likely to become the majority party in the House. The Senate race is also expected to be very close.

The New York Times (NYT) evaluated, "Since the congressional session has not yet begun and if the Republicans take control of Congress, the likelihood of approving such a tax bill is much lower," adding, "It is closer to putting more pressure on oil companies than a realistic policy prescription." The Hill reported, "Officially pressuring oil companies can politically help President Biden and the Democratic Party ahead of the midterm elections," explaining the background.

On the other hand, the oil industry strongly opposed the move. The Independent Petroleum Association of America (IPAA) argued, "President Biden should stop the blame game as the election day approaches and instead support oil and gas workers to increase supply in the U.S."

The Republican National Committee also stated in a press release on the same day, "President Biden is lying. Americans know that under Biden and the Democrats, gasoline and food prices have become more expensive and real wages have declined," adding, "The best way to lower gasoline prices is to vote for the Republican Party."

This content was produced with the assistance of AI translation services.