Former Obama economic adviser questions Biden-proposed windfall profits tax
Larry Summers says the tax would 'discourage investmment'
Gov. Kevin Stitt, R-Okla., reacts to the president attacking oil companies for making too much money, telling 'Cavuto: Coast to Coast' that Washington should look to Oklahoma for common sense energy solutions.
Former Treasury Secretary Larry Summers on Tuesday questioned a potential windfall tax on oil company profits, saying it would discourage investment.
Summers, who held positions in the Clinton and Obama administrations, tweeted he was "not sure" he understood the "argument for a windfall profits tax on energy companies." He argued that reducing profitability would "discourage investment," which he said was the "opposite of our objective."
"If it is a fairness argument, I don’t quite follow the logic since even with the windfalls Exxon has underperformed the overall market over the last 5 years," Summers continued.
Larry Summers during an interview at Harvard's Kennedy School of Government. (Jim Davis/The Boston Globe via Getty Images / Getty Images)
He tweeted the comments the day after President Joe Biden slammed major oil companies’ recently reported earnings. The president also urged oil companies to invest profits in boosting U.S. production and refining capacity and lowering the prices Americans have been seeing at the pump or face possible restrictions.
BIDEN SLAMS OIL COMPANY PROFITS, THREATENS WINDFALL TAXES AS PENALTY
"If they don’t, they’re going to pay a higher tax on their excess profits and face other restrictions," Biden said. "My team will work with Congress to look at these options that are available to us and others."
President Joe Biden speaks at the U.N. climate summit, Nov. 2, 2021, in Glasgow, Scotland. (AP Photo/Evan Vucci, Pool, File / AP Newsroom)
Last week, some oil companies reported large quarterly profits.
ExxonMobil said it generated $112.07 billion in third-quarter revenue and $19.7 billion in net income, respective increases of roughly 52% and 191% year-over-year. Chevron’s quarterly profit rose 84% to $11.23 billion while its revenue jumped 49% to $66.65 billion
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Meanwhile, for its third quarter, Shell said it had $9.45 billion in adjusted earnings, up from $4.13 billion in the same period the prior year.
Working oil pumps (iStock / iStock)
Biden, accusing oil companies of "war profiteering" off Russia’s invasion of Ukraine, called recent profits "outrageous." He argued the cost of gas would become 50 cents lower if they were "making average profits they’ve been making by refining oil over the last 20 years" and "passed the rest on to the consumers."
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On Tuesday, British energy company BP reported its underlying replacement cost profit rose from $3.32 billion in the third quarter of 2021 to $8.15 billion during this year's third quarter.