'They ain't seen nothing yet': President Biden’s feud with oil companies heats up again as the industry fires back. But could it end up just burning you?

Sigrid Forberg

MONEYWISE.COM
Mon, January 16, 2023 at 5:00 AM MST·5 min read

'They ain't seen nothing yet': President Biden’s feud with oil companies heats up again as the industry fires back. But could it end up just burning you?

It may be a new year, but President Joe Biden’s feud with the country’s major gas companies is raging on.

Biden has taken issue with oil juggernauts like Chevron and Exxon Mobil that have been raking in profits this last year — especially in the wake of scorching inflation and Russia’s war in Ukraine.

Now, the oil and gas industry is turning up the heat on the situation.

In his annual address in Washington on Jan. 11, American Petroleum Institute President Mike Sommers blamed the “barrage of negative rhetoric” from the White House for slowing domestic oil and gas production.

With gas prices still elevated, and many households muddling through an expensive winter, the strained relationship between Biden and the country’s oil companies could mean the situation will only get worse over the next few months.

Biden hasn’t minced his words

Biden has been waging a battle with oil companies since before he even took office, but he escalated it last November when he called their record profits "a windfall of war," not the result of anything "new or innovative."

He went on, exhorting them to “act beyond their narrow self-interest,” and “invest in America by increasing production and refining capacity” on behalf of “their consumers, their community and their country.”

And if they don’t? Biden warns they’re going to face “a higher tax on their excess profits and … higher restrictions.”

Shortly after that, Amos Hochstein, a special presidential coordinator for Biden, told the Financial Times it was “un-American” and “unfair to the … public” that companies didn’t use those record profits to invest in increased production.

What Biden appears to be proposing is a “windfall” tax, which would redistribute profits to American consumers still paying out the nose at the pump.

“It’s time for these companies to stop war profiteering, meet their responsibilities in this country and give the American people a break,” Biden added.

Oil companies fire back

While gas has dropped from a record high of over $5/gallon in June, it’s still currently hovering around $3.28. And that, along with a dangerously low oil supply and a dwindling diesel stockpile is clearly weighing on Biden.

But oil companies argue they’re already contributing to the cause. Exxon Mobil’s CEO Darren Woods took a moment during the company’s third-quarter earnings call on Oct. 28 to address Biden.

“There has been discussion in the U.S. about our industry returning some of our profits directly to the American people,” Woods said. “That’s exactly what we’re doing in the form of our quarterly dividend."

The president didn’t take kindly to that, tweeting his response a few hours later: “Can’t believe I have to say this but giving profits to shareholders is not the same as bringing prices down for American families.”

Read more: [Over 65% of Americans don't shop around for a better car insurance deal — and that could be costing you $500 a month

The issue has become political

But all this back-and-forth could only be aggravating the situation. A blog post from the Institute for Energy Research accused the Energy Department of asking them to “undersell their product” and accused Biden of using the country’s Strategic Petroleum Reserve “as a political tool to lower gasoline prices.”

And in an interview with Bloomberg, Sommers from the American Petroleum Institute said the signals Biden is sending discourage investment in the oil and gas industry “does harm to capital.”

“If the government signals support for American energy, it would boost investor confidence in future projects to unleash needed supplies and strengthen infrastructure,” Sommers says.

Biden does seem prepared to compromise, though. According to another report in Bloomberg, Energy Secretary Jennifer Granholm addressed oil and gas executives in Washington in mid-December at a meeting of the National Petroleum Council, an outside federal advisory group with members from Exxon Mobil Corp. and Royal Dutch Shell Plc.

“We are eager to work with you,” Granholm said, adding that fossil fuels are likely to be around for a while.

She also acknowledged the administration has "butted heads" with the industry, referring to it as the “elephant in the room." And with growing demand and a shortage of diesel in the northeast, she says the administration is aware fossil fuel production will need to increase soon.

Don’t expect Biden to capitulate

Still, the president isn’t likely to cave entirely.

Just a few short months ago in November, Exxon and Chevron, two of the country’s biggest oil companies, reported hefty profits for the fourth consecutive quarter. That same day, in a briefing from the White House, Biden pointed out that six of the largest companies “made $70 billion in profit” in just 90 days.

Appalled that all that money was going back to their shareholders and executives, Biden issued a promise: “I’m going to keep harping on it. [These companies] talk about me picking on them, they ain’t seen nothing yet. I mean it. It outrages me.”