President Joe Biden endeavored during his State of the Union address Tuesday night to reassure lawmakers — and the American public — that fossil fuels are here to stay for the next decade.
But for Republicans, such reassurances did little to neutralize his broadside against Big Oil and the record profits raked in by the industry’s giants amid a global energy crisis.
Sen. Bill Cassidy (R-La.) called it “a superficial demagogic attack on oil,” while Sen. John Barrasso (R-Wyo.), the ranking member of the Senate Energy and Natural Resources Committee, said it was part of a “dog whistle speech aimed at appealing to the far left.”
“It’s a stereotypical soundbite,” said Rep. John Curtis (R-Utah), the chair of the Conservative Climate Caucus. “My district is full of Small Oil. And it’s often overlooked. And these several large companies are always blamed for every problem.”
Referring to the fossil fuel industry as “Big Oil,” Biden maligned the biggest oil companies for collectively posting nearly $200 billion in profits last year as gas prices skyrocketed following the Russian invasion of Ukraine.
“It’s outrageous,” he said. “They invested too little of that profit to increase domestic production and keep prices down. Instead, they used those record profits to buy back their own stock, rewarding their CEOS and shareholders.
“Corporations ought to do the right thing,” Biden continued. “That’s why I propose we quadruple the tax on corporate stock buybacks to encourage long-term investments instead.”
Biden didn’t specifically link the oil and gas industry’s astronomical profits last year to the sector’s contributions to the climate crisis, as many of Congress’ biggest industry critics frequently do.
His comments were also not entirely new: The administration has, for the last few weeks, been sounding the alarm on the need to tax oil company stock buybacks, specifically, to encourage investment in production to lower prices.
If Biden’s tax hike were to be implemented, the advocacy group Climate Power estimates buybacks from the first nine months of 2022 would have raised $4.4 billion toward funding clean energy projects. The Inflation Reduction Act has already raised $1.1 billion from corporate stock buybacks, according to Climate Power.
The president’s decision to use such a high platform to condemn the industry last night nonetheless energized climate hawks who have been pushing for Congress to take action against the titans of the sector — even if some environmentalists expressed concern about Biden’s ad-lib about the need for oil.
“I thought it was important on politics and policy,” said Sen. Brian Schatz (D-Hawaii). “We have an opportunity to generate a lot of revenue without creating, really, any pain for consumers, and in the middle of a global energy crisis, these guys were cleaning up financially, so it’s about time they pay their fair share.”
Schatz added that Biden was “leaning into a climate agenda … understand[ing] that it’s got a lot of populist appeal, and the politics of the ‘80s and ‘90s, when climate action was some sort of vulnerability for Democrats, is in the rearview mirror.”
‘A climate change battle to win’
Last week, a group of Democratic lawmakers from the House and Senate convened a press conference to push for passage of the “Big Oil Windfall Tax Credit,” a proposal championed by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.) that would “claw back” the excess profits from the largest oil companies and return some of the money to American consumers (E&E Daily, Feb. 2).
On Tuesday night, Whitehouse — the new chair of the Senate Budget Committee who plans to make climate a centerpiece of his panel’s agenda — said he was “delighted to see a little pep in [Biden’s] step about the mischief that Big Oil has been up to, gouging the American public, and look forward to working with him to solve the various pollution-related problems.”
Asked whether he thought Biden’s comments might galvanize the Senate Democratic majority to force the oil industry to return money both to taxpayers or energy production, Whitehouse said there were many competing legislative proposals to achieve that goal, and “I think we‘re all working in an area that is important to the people’s pocket books.”
Sen. Elizabeth Warren (D-Mass.) praised Biden not only for endorsing higher taxes for “the wealthy and well-connected” but the fact that he “put the particulars to it.”
Sen. Tom Carper (D-Del.), chair of the Senate Environment and Public Works Committee, suggested Biden’s comments aligned with something he said he often tells oil companies: “I say, ‘Don’t think of yourself as an oil company, think of yourself as an energy company.’ … They know that it’s not going to be oil and gas forever. Eventually, that’s gotta go. And we have a climate change battle to win.”
Ultimately, it remains to be seen if and how Biden’s remarks Tuesday night on the oil industry will translate into a legislative agenda in the Democratic-controlled Senate.
In the Republican-controlled House, the proposal is a nonstarter for plenty of reasons.
“Let’s peel it back a little bit,” said Rep. Garret Graves (R-La.). “The sole reason that we have higher energy prices is because [the Biden administration has] restricted supply. … So they’ve created the higher prices on oil today. That is resulting in the record profits. I mean, they’ve created this scenario, and for them to not even understand — that is absolutely frightening to me.”
House Natural Resources Chair Bruce Westerman (R-Ark.) echoed Graves’ criticisms.
“He doesn’t want to own up to his own mistakes about cutting off supply,” Westerman said of Biden. “Prices are going to go up. Oil companies made a lot of money. It’s his fault, because he decreased supply, raised prices and they made a lot of profit. Whoever wrote that speech doesn’t have a very good understanding of basic economics.”
Reporters Ellie Borst and Andy Picon contributed.