Former President Bill Clinton’s Treasury Secretary Larry Summers slammed President Joe Biden’s plan to tax major oil companies’ windfall profits on Tuesday in several posts on Twitter.
During a speech on Monday, Biden threatened to work with Congress to tax energy companies’ profits after Exxon Mobil and Chevron reported significant quarterly profits.
Summers, who worked in the Obama administration as well as the Clinton White House, said that Biden’s plan makes no sense because it would reduce profits and investment in the industry, thus actually exacerbating the current energy shortages Biden has previously claimed he would try and solve.
I’m not sure understand the argument for a windfall profits tax on energy companies. If you reduce profitability, you will discourage investment which is the opposite of our objective.
— Lawrence H. Summers (@LHSummers) November 1, 2022
Following Russia’s invasion of Ukraine, Biden accused oil and gas companies of war profiteering and of artificially raising fuel prices.
The American Petroleum Institute, an industry group that represents Exxon and Chevron, also stated on Monday that global markets determine energy prices and that therefore Biden’s plan would actually accomplish the opposite of what it intended.
According to a 2006 Congressional Research Service report, windfall profit taxes imposed in the 1980s reduced oil production and forced the United States to become more reliant on foreign oil.