President Biden announced today that his administration would explore working with Congress to institute a new federal tax on American oil and gas companies. While some members of Congress have introduced “windfall profits tax” legislation, this is the first public statement from the administration offering tacit support of higher taxes specifically designed to punish traditional energy companies.
This is the President’s latest attempt to appear as though he is doing something to alleviate high energy prices ahead of next week’s midterm elections. However, higher taxes on energy companies would have no short-term reduction on prices at the pump. In fact, evidence suggests that a new WPT would raise gasoline prices as it would lead to reduced domestic oil and natural gas production.
Several analyses of the 1980 WPT have found it reduced domestic production and increased reliance on imports. It’s likely that an updated iteration of the 1980 law would yield the same consequences.
Please find below a statement from me, Craig Stevens, spokesman for the GAIN Coalition and former senior advisor to U.S. Energy Secretary Sam Bodman:
“A windfall profits tax would represent another escalation in the Biden administration’s assault on the American energy industry. We all know that when you tax something, you get less of it – and new taxes will have the same effect on American energy production. If imposed, the tax will raise consumer costs, disincentivize energy production, and make us more reliant on foreign energy producers.
Instead of punishing American companies, the President should encourage greater energy development in the U.S. helping to strengthen our economy and national security.”