You know it will come. Even as President Biden pleads with OPEC to pump more oil, Senate Democrats are threatening to punish American oil companies with a tax on profits if they increase production. The contradiction nicely summarizes progressive energy policy.
“Putin’s war is driving up gas prices — and the Big Oil companies are raking in record profits,” Elizabeth Warren tweeted Thursday. To curb what she called “the Big Oil fraud,” she and 11 other Democrats in the Senate introduced legislation imposing new taxes.
Colorado Senator Michael Bennet said: “We need to hold the big oil companies accountable” and “urgently need to invest in America’s clean energy economy.” Responsible for what? Making money in a legit business? Meet a clear consumer need?
The Senators’ plan would require companies that produce or import at least 300,000 barrels of oil a day (or so in 2019) to pay a tax per barrel equal to 50% of the difference between current and average prices. average between 2015 and 2019 (about $57 a barrel). They say smaller companies will be exempted so the giants cannot raise prices without losing market share.
But oil companies don’t set prices, as the Federal Trade Commission has found time and time again. Supply, demand and market expectations have. Crude oil prices fell $20 a barrel on Thursday after the United Arab Emirates said it would encourage OPEC members to increase output. Imagine how much oil prices could fall if President Biden announced a punitive climate regulation ban on fossil fuels. Instead, Democrats are threatening to hurt manufacturers for producing more.
Not long ago, climate progressives argued that falling oil profits showed companies need to move away from fossil fuels. That’s what last year’s ExxonMobil board fight was supposed to be all about. Liberals also say that asset managers should divest from oil companies because their profits will inevitably decline as the world embraces green energy.
But now Democrats say oil companies are being over-profitable and blame them for benefiting from tighter oil supplies and higher prices fueling political hostility over the fuel. fossils are getting worse. Senator Sheldon Whitehouse of Rhode Island said that “oil companies never let a good crisis go to waste”. So do the Democrats.
The proposed tariffs show that Democrats do not want American companies to produce more oil to lower gasoline prices. They want higher gas prices to make consumers reluctant to buy more electric cars. They can’t say this directly because it would be political suicide in an election year with gas prices averaging over $4 a gallon, so they do it indirectly through taxes and regulation.
It’s hard to believe that President Biden will back off on the levy, but given the influence of climate lobbying in this administration, you never know.
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Appears in print March 12, 2022.
https://www.wsj.com/articles/democrats-for-higher-gas-prices-11647042264 Democrats for higher gas prices