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Energy & Environment Oil profits are a strong argument for windfall taxes

Energy & Environment Oil profits are a strong argument for windfall taxes

Energy & Environment Oil profits fuel calls for windfall tax
Greg Nash

Friday saw record profits for the oil industry, prompting progressives and activists to call for consumer relief. Some House Democrats want Nancy Pelosi (D.Calif.), to join them in a gas tax holiday. EPA is expected to maintain seven-year-old smog rules. 

This is Overnight Energy & Environment, your source of the latest news about energy, the environment, or beyond. For The Hill, were Rachel Frazin and Zack Budryk. This newsletter was sent to you by someone? Register here 

Let’s jump in.

Progressives seize quarterly oil profit

Exxon Mobil Corp. (energy giant) and Chevron Corp. (energy giant) posted huge profits Friday, aided by sky-high oil prices. They also told investors that they plan on keeping oil production mostly flat.  

Chevron earned $6.3 billion in its first quarter, more than quadrupling its profit compared to the same period last. Exxon made $5.5 billion, more that twice the amount of last year’s first-quarter haul.  

AAA reports that oil and gas companies have been the biggest beneficiaries of rising gas prices. These prices rose by 44 percent in the United States over the past 12 month. Due to supply constraints caused by the pandemic and Russia’s invasion of Ukraine, crude oil is still above $100 per barrel. 

Progressives pounce: Critics of oil companies argued that the reports were evidence of gouging by fossil fuel industries at a moment when gas prices are rising rapidly. Environmental groups called for taxation on oil company profits to be passed onto consumers. 

Midterm headwinds are partly due to pain at the pump. The increases have been blamed by congressional Democrats on corporate greed and the Ukraine crisis. Republicans pointed fingers at Biden’s 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 Oils profits skyrocketed last quarter while hardworking Americans suffered at the pump. Let’s pass my bill together with @SenWhitehouse in order to stop this profiteering. 

However, the industries are not on board for an increase in 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, on the other hand, announced plans to triple stock repurchases to $30 Billion through 2023. Chevron however stated that it would repurchase record amounts of stock up to $10 Billion by the end.  

Exxon CEO Darren Woods stated that he wanted to acknowledge the real impact high prices have on families around the globe. You may recall that this was something we anticipated in 2020 with lower industry investment levels than required to offset the depletion. 

Major shareholders have urged oil giants not too invest in new production, arguing they could be bad investments if oil prices fall. 

You can read more about Karl Evers – Hillstrom and The Hills Zack Budryk here.

VULNERABLE DEMS PELOSI PRESS PELOSI ABOUT GAS TX HOLIDAY

Embattled Democrats are pushing back on Speaker Nancy Pelosis (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. 

This is especially true for lawmakers who face tough reelection campaigns in November and are eager to bring home policies that would provide immediate savings for drivers at their pumps. 

They are not hiding their dismay at the approaching summer driving season by arguing that the tax holiday would be ineffective.  

They are saying: They are focused on things that could be useful, but they are also more long-term. I am more concerned with the short 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 that Congress doesn’t have a silver bullet to address high prices. She stated that suspending the federal gasoline tax, currently 18.4c per gallon, would be an efficient, effective and quick way to lower costs.  

Slotkin said that although it is not perfect, it is something. You might also be interested in any assistance if you come from a place where people drive 40 miles one way to work. 

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. 

He said that tax suspension in states like his would have an added benefit as it would encourage people who are heavily dependent on tourism to travel this summer. 

Learn more from The Hills Mike Lillis

EPA takes steps to maintain 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 EPAs Clean Air Scientific Advisory Committee will meet in June to make a decision, and EPA Administrator Michael Regan must sign off after that. 

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However, environmentalists and anti-air polluting groups expressed dismay at this step, which confirms one of Trump EPA’s final decisions in December 2020. 

The 2015 standards established a maximum limit for ozone (the primary component of smog) of 70 parts/billion (ppb). Advocates have urged Andrew Wheeler and Regan to raise the standard to 60 parts per billion (ppb) for ozone, which is the primary component of smog. 

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

Holly Bender (Senior Director of Energy Campaigns for Sierra Clubs) stated in a statement that suggesting the EPA maintain the outdated standards for smog pollution that have caused most Americans to face unhealthy summer air quality at a time when families and communities are trying to spend more outdoor time, is not only wrong but dangerous. 

Find out more about the move.

ON TAP NEAREST WEEK

Wednesday: 

  • The Senate Appropriations Committees Subcommittees on Interior, Environment and Related Agencies and Energy and Water Development are holding hearings to review proposed budget estimates and justifications for fiscal year 2023 for both the Forest Service and Department of Energy. 

Thursday: 

  • A hearing will be held by the Senate Energy Committee to examine budget estimates and justifications for fiscal year 2023 of the Department of Energy. Jennifer Granholm, Energy Secretary is scheduled to testify.

WHAT WE’RE READING

  • Russia has sold more than $66 billion in fossil fuels since the invasion (Newsweek)
  • California promised to shut down its last nuclear plant. Newsom is now considering (The Los Angeles Times).
  • Europe is looking for American natural gas. This could increase U.S. gas prices. (The Washington Post).
  • Gov. Governor Kim Reynolds and 7 other Midwest governors request EPA for permanent, year-round sales of E15 gas (Des Moines Register).
  • Is Gina McCarthy really an expert on climate rules? (E&E News)

Finally, here’s something completely offbeat: Ready to go and feeling motivated 

This is it for today. Thanks for reading. For the most recent news and coverage, visit The Hillsenergy & environment page. We look forward to seeing you Monday.

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