Overnight Energy & Environment

Energy & Environment — Oil profits fuel calls for windfall tax

by Zack Budryk and Rachel Frazin 04/29/22 06:39 PM ET

Greg Nash

The oil industry posted big profits Friday, fueling calls from activists and progressives for consumer relief. Also, some House Democrats want Speaker Nancy Pelosi (D-Calif.) on board with a gas tax holiday, and the EPA is poised to leave seven-year-old smog rules in place.

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Let’s jump in.

Progressives seize on quarterly oil profits

Energy giants Chevron Corp. and Exxon Mobil Corp. on Friday posted huge profits bolstered by sky-high gas prices and told investors that they plan to keep oil production mostly flat.

Chevron raked in $6.3 billion in the first quarter, quadrupling its profit from the same period last year, while Exxon brought in $5.5 billion, more than double last year’s first-quarter haul.

The oil and gas companies are among the biggest beneficiaries of soaring gas prices, which rose 44 percent in the U.S. over the last 12 months, according to AAA. Crude oil remains above $100 per barrel amid supply constraints stemming from the pandemic and Russia’s invasion of Ukraine.

Progressives pounce: Critics of the oil companies called the reports evidence of gouging by the fossil fuel industry at a time when consumers have seen gas prices skyrocket. Environmental groups have called for taxes on oil companies’ windfall profits to be passed on to consumers.

Facing midterm headwinds due in part to pain at the pump, congressional Democrats have pinned the increases on a combination of corporate greed and the Ukraine crisis. Republicans have pointed the finger at Biden administration policies.

Rep. Ro Khanna (D-Calif.) cited the earnings reports in support of bicameral windfall tax legislation he has introduced with Sen. Sheldon Whitehouse (D-R.I.), tweeting, “Big Oil’s profits skyrocketed last quarter while hardworking Americans suffered at the pump. Let’s pass my bill with @SenWhitehouse to stop this profiteering.”

But the industry’s not on board with increasing production: Despite calls from the Biden administration to increase oil production to bring consumer prices down, Chevron and Exxon executives on Friday said that they would keep production relatively flat.

Exxon instead announced plans to triple its stock repurchases to $30 billion through 2023, while Chevron said it would repurchase a record $10 billion of stock by the end of the year.

“I want to acknowledge the very real impact the high prices are having on families all around the world,” Exxon CEO Darren Woods said on an earnings call. “You may recall that we anticipated this in 2020 with industry investment levels well below those required to offset depletion.”

Major shareholders have urged oil and gas giants not to invest too much in new production, arguing that those capital expenditures could turn into bad investments when oil prices inevitably drop.

Read more here from The Hill’s Zack Budryk and Karl Evers-Hillstrom.

VULNERABLE DEMS PRESS PELOSI ON DECISION ABOUT GAS TAX HOLIDAY

Embattled Democrats are pushing back on Speaker Nancy Pelosi’s (D-Calif.) decision to reject a gas tax holiday, urging party leaders to reconsider a proposal as lawmakers take a beating over sky-high gas prices.

The grumbling is especially pronounced among lawmakers facing tough reelection contests in November, who are eager to bring home a policy they say would provide tangible and immediate savings for drivers at the pump.

As the summer driving season quickly approaches, they’re not disguising their dismay with their own leadership’s argument that the tax holiday would prove ineffective.

What they’re saying: “I guess they’re focused on things that would be helpful, but they’re longer-term. And I’m focused on the shorter term. And I think that if they came to my district they would see that we have a short-term need that needs to be addressed,” said Rep. Elissa Slotkin (D-Mich.).

Slotkin acknowledged there’s no silver bullet at Congress’s disposal to deal with high prices. But suspending the federal gas tax, currently 18.4 cents per gallon, would be an efficient and effective way to lower costs quickly, she said.

“It’s not perfect, what I’m proposing, but it is something,” Slotkin said. “And if you are from a state where people drive 40 miles one-way to work, you’re interested in whatever helps.”

Rep. Chris Pappas (D-N.H.), another supporter of the gas tax holiday, echoed those concerns, characterizing the proposal as “the most immediate way that we can deliver some much-needed relief.”

In states like his, where the economy leans heavily on tourism, he said the tax suspension would have an additional benefit because it would “encourage people to travel this summer.”

Read more from The Hill’s Mike Lillis.

EPA moves to keep Obama-era smog standards

The Environmental Protection Agency (EPA) signaled late Thursday that it will retain an Obama-era rule on ground-level ozone pollution despite calls from environmentalist groups to strengthen it.

The draft assessment published by the agency Thursday is only the first step in officially keeping the standards in place; the EPA’s Clean Air Scientific Advisory Committee will meet in June to make a decision, and EPA Administrator Michael Regan must sign off after that.

However, environmentalist and anti-air pollution groups expressed dismay at the step, which affirms one of the final decisions made by the Trump EPA in December 2020.

The 2015 standards establish a maximum of 70 parts per billion (ppb) for ozone, the primary component of smog. Advocates have called on both Regan and his predecessor, Andrew Wheeler, to tighten the standard to 60 ppb.

They were hopeful after the announcement last October that the EPA would review the rule in response to legal challenges.

“Suggesting the EPA uphold the grossly outdated standards for smog pollution that have resulted in most Americans facing unhealthy summer air quality just as families and communities are hoping to spend more time outdoors, is not only wrong, it’s dangerous,” Holly Bender, Sierra Club’s Senior Director of Energy Campaigns, said in a statement.