Big Oil just handed Biden a crisis. This is how he can solve it

Whether this latest move by OPEC is an intentional political attack on Biden or not, the decision shows the limits of the White House strategy of trying to play nice with oil and gas producers

(EPA)

Perhaps fist-bumping with autocrats isn’t the best way to deal with high gas prices after all. This Wednesday, Saudi Arabia and OPEC rebuffed President Biden’s pleas and announced they’ll be cutting production by up to 2 million barrels a day, enough to send oil and gas prices climbing again right before the US midterm elections.

Whether the move is an intentional political attack on Biden or not, the decision shows the limits of the White House strategy of trying to play nice with oil and gas producers as they drive up prices around the world. No amount of sweet-talking or saber-rattling is going to convince Big Oil to stop profiteering from disruptions caused by the war in Ukraine.

Instead, the White House and Congress should take concrete action to help American families by passing a windfall profits tax on Big Oil. A windfall profits tax would take a percentage of Big Oil’s obscene profits — which will only go up with OPEC’s latest move — and send the money directly to American consumers to help offset the price of high oil and gas prices.

Oil companies like Exxon, Chevron, Shell and BP have already made over $100 billion in “grotesque” profits this year. Instead of forgoing those profits to keep prices low, or at least investing their earnings in climate solutions that lower our dependence on fossil fuels, Big Oil is using that money to reward their CEOs and wealthy shareholders with tens of billions in stock buybacks. In other words, they’re taking money directly out of the wallets of everyday people and shoving it into their own bulging pockets. A windfall profits tax would reverse that profit pipeline, sending money back to the families who need it most.

The idea has growing support across the US and around the world. A windfall tax has already been put into place in a number of European countries. Last week, the EU’s energy ministers adopted the idea. The United Nations Secretary General said in a recent speech to the General Assembly that it was time to “make polluters pay” and called on developed countries to “tax the windfall profits of fossil fuel companies.” Even the outgoing CEO of Shell said that a tax on oil and gas firms was “inevitable.”

In the US, dozens of members of Congress, including Senate Majority Leader Chuck Schumer, have thrown their support behind an array of windfall profits tax bills. Gavin Newsom, the governor of California — the fifth-largest economy in the world and home to one in 10 Americans — recently endorsed the plan. While President Biden has yet to formally support the windfall tax, his rhetoric seems to be edging towards it by the day. When last asked directly about the proposal, the White House said they were looking at it closely.

Along with being smart policy, a Big Oil windfall tax happens to be great politics. Headed into November, Democrats need a clearer message on gas prices and blaming Putin isn’t going to cut it. Instead, they should point the finger directly at the Big Oil executives raking in billions and call for a windfall profits tax to help American families. The public will be with them: 87 percent of voters want Congress to stop Big Oil profiteering and 80 percent support a windfall profits tax.

Supporting a windfall profits tax would allow Democrats to play smart offense against their Republican opponents, many of whom have taken hundreds of thousands of dollars from Big Oil. That includes candidates like Wisconsin Republican Senator Ron Johnson, who has taken over $700,000 from oil and gas. And; Nevada Republican Senate candidate Adam Laxalt, who has taken thousands from oil and gas and whose firm made millions defending Chevron while he invested in the company’s stock. It’s no surprise that leading Democratic Senate candidates, like Lt. Governor John Fetterman in Pennsylvania, are calling for the prosecution of corporate price gougers: they know this is the message that voters want to hear.

In response to the OPEC news, Republicans have repeated their same failed “drill, baby, drill” mantra. What they really want is more handouts to their Big Oil donors. The truth is that any attempt at US “energy independence” based on fossil fuels is a mirage. Drilling more here in the US won’t insulate us from global price hikes nor the greed of Big Oil, and it will destroy the climate in the process. The only way to really protect consumers and the planet is to rapidly reduce our dependence on oil and gas and get the public relief in the process.

Begging OPEC to increase production or giving Exxon more access to public lands and waters won’t help get us out of this hole; it will only drill us deeper. Clean energy has given us a ladder we can climb to true energy independence. In the meantime, a windfall profits tax can help families offset any increase in fossil fuel prices until the point they never have to worry about them again. President Biden and Congress should act today.

Jamie Henn is the director of Fossil Free Media, which leads the Stop The Oil Profiteering campaign