Taxing Excess Energy Profits of American Oil and Gas Companies to Help Families Adapt to Energy Costs: A Brief Report from the Biden Administration
The US is not being able to afford high energy costs. By taking these steps, Congress will help mitigate the financial strain on middle and lower-income families and help them afford costs they can’t control due to the continued instability of global energy market conditions.
Rising prices for fossil fuels – oil, natural gas and coal – have led to record profits this year for the companies that produce and sell them. Last week, for example, ExxonMobil reported record profits for a second quarter in a row, and Chevron reported profits that were almost double what they were last year.
American consumers, meanwhile, have been feeling the pain of high energy prices as their wages have not kept up with inflation. In the last 12 months, prices in the US have risen for gasoline, electricity, and natural gas. And the impact of these rising prices is being felt particularly by lower-income households and workers.
There should be legislation passed by the Biden administration and Congress to redistribute a portion of the profits of energy companies to families who are struggling to pay their energy bills. President Joe Biden indicated his support for a tax on excessive oil and gas company profits, as a result of the spike in prices.
The funds from the excess profits tax could be used to provide housing efficiency grants and tax credits for families to weatherize their homes in order to protect them against future price increases, as well as to help them reduce the amount of energy they need to use. They could also provide a cap on the total amount of money a family would spend on home energy bills this winter and protect them from future price increases. Ohio has a plan that restricts the amount a low-income family can spend on energy. If they heat their house with natural gas, they will only have to pay their monthly bill in a percentage of their income. If they heat with electric, their monthly bill is limited to 10% of their gross income.
Natural Gas Exports in the U.S. and the Implications for American Home Prices and Low-Energy Continuum Energy
For one thing, nearly all foreign gas hubs are priced significantly higher than in America, providing ample opportunity for traders to export US natural gas to profit off the difference between the higher prices in other parts of the world and prices in the US. And since the war in Ukraine began earlier this year, the US has increased exports to Europe as Russia cut back its own exports there.
The Department of Energy approving licenses might be in violation of the public interest. Some of the nation’s leading energy and environmental policy groups, including the two organizations we represent, sent a letter to the Secretary of Energy asking if the exports ofLNG are increasing prices at home and harming lower income families.
In February, 10 US senators sent a letter to Secretary Granholm asking her to review natural gas exports and their impact on domestic prices and develop a plan to ensure that the fuel is affordable for Americans.
The Jones Act requires goods to be shipped between the US and other countries only by US-built, owned and crewed ships. But because there aren’t any Jones Act-compliant liquefied natural gas vessels, it is currently impossible to ship US liquefied natural gas to American ports. This limits competition and increases prices for companies and households.
The federal government must step up to the plate this winter and address the impact of high energy prices on low-income families so they do not have to choose between paying their heating bill and other essential necessities.