WASHINGTON — With diesel prices still averaging above $5 a gallon and gasoline above $4, some of the nation’s lawmakers are saying that oil companies may be to blame.
House Democrats on Wednesday accused oil companies of “ripping off the American people” and putting profits before production as Americans suffer from ever-increasing fuel prices during the war in Ukraine.
“At a time of record profits, Big Oil is refusing to increase production to provide the American people some much needed relief at the gas pump,” said Rep. Frank Pallone, D-N.J., chairman of the House Energy and Commerce Committee.
Some states have taken action on their own, enacting fuel tax holidays.
So far, Maryland, Georgia and Connecticut have enacted temporary suspension of taxes, though in Connecticut, the rule doesn’t apply to diesel taxes.
In Maryland, Gov. Larry Hogan signed legislation suspending collection of fuel taxes for 30 days. The tax relief ends April 16. The gas tax there has been set at 36.1 cents and the diesel rate at 36.85 cents.
In Georgia, Gov. Brian Kemp signed a law suspending collection of fuel taxes through May 31. The state collects a 29.1-cent gas tax and a 32.6-cent diesel tax.
In Connecticut, Gov. Ned Lamont signed a bill into law March 22 to give motorists a three-month holiday from paying the state’s 25-cent excise tax on gas, but the law does not affect the 41.1-cent tax on diesel.
Arizona, Iowa, Michigan, Massachusetts and West Virginia all have pending legislation related to suspending their respective gas taxes temporarily.
In Arkansas, Gov. Asa Hutchinson said he prefers the idea of a tax rebate for the state’s residents rather than temporarily suspending the gas tax.
“I know that Arkansans are struggling with higher fuel costs,” Hutchinson said in a media briefing Tuesday. “We drive a long ways to work to work in the factory or working on the farm.”
When asked if he would consider making changes to the state’s gas tax, he said that was a decision for the legislature but that he did not support it.
“I don’t think the solution is to suspend the gas tax because that’s a temporary fix,” he answered. “It also jeopardizes our investment in something that is very important to our citizens, and that is roads that don’t tear up your car every day.”
Truckers who pay their fuel tax through the International Fuel Tax Agreement (IFTA) have options as well.
IFTA Executive Director Carmen Martorana recently told Land Line Media that drivers wouldn’t have to pay state fuel tax if they are buying and burning the fuel in a state that is not collecting the tax.
According to Land Line, Martorana pointed out that drivers who buy fuel in a state with a fuel tax exemption and drive in a state without an exemption, drivers would have to pay that tax out of pocket.
She added that if a driver pays taxes on fuel in one state, but then drives in a state that has a tax holiday, they can get reimbursed.
Meanwhile, oil executives, testifying before Congress for the second time in six months, responded that oil is a global market and that oil companies don’t dictate prices.
“We do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging,” said Chevron CEO Michael Wirth.
Facing sharp questions from Democrats, Wirth, ExxonMobil CEO Darren Woods and other executives said their companies have no plans to halt payments of dividends to stockholders or to restrict stock buybacks that have enriched shareholders and company executives. The six companies at the hearing recorded $77 billion in profits last year, they testified.
The hearing comes as President Joe Biden has ordered the release of 1 million barrels of oil per day from the nation’s strategic petroleum reserve for six months in a bid to control energy prices, which have spiked as the United States and its allies have imposed steep sanctions on Russia over its invasion of Ukraine. The national average gas price was $4.16 a gallon for regular on Wednesday, up from $2.87 a year ago, according to AAA.
Biden and other Democrats have blamed Russian President Vladimir Putin and the U.S. oil industry for the increase, citing reports that oil companies have made record profits in recent months as prices have risen following Russia’s invasion of Ukraine.
“This is the Biden price hike,” countered Rep. Cathy McMorris Rodgers of Washington state, the committee’s top Republican.
Noting that prices were increasing before Russia invaded Ukraine in late February, McMorris Rodgers said Americans “are too smart and have not fallen for this” claim by Biden and other Democrats. She called the hearing “purely political.”
Woods said Exxon has halted investments in Russia and is withdrawing from operations there. The company is increasing production in the United States, Woods said, including in the oil-rich Permian Basin in New Mexico and Texas. Exxon also is increasing production outside the U.S., including “a world-class development in Guyana,” he said.
Rep. Kim Schrier, D-Wash., said gas prices are close to $5 per gallon in her Seattle-area district. Her constituents “are mad, and they should be,” she said, citing the record profits oil companies are reaping.
“This feels like gouging. It even feels like profiteering,” Schrier said. Prices at the pump have not gone down in recent weeks along with crude oil prices, she and other Democrats noted.
At a time of war and high prices, “oil companies should not be sending profits back to shareholders,” she said, urging oil executives to restore production to pre-pandemic levels.
Wirth, the Chevron CEO, said his company produced a record amount of oil in 2021, while also making sure to “return value to shareholders” through higher dividends and stock buybacks.
“They’re not mutually exclusive. We can do both,” he said.
Democrats have introduced bills in the House and Senate to impose a windfall tax on oil profits, although the idea has generated little momentum on Capitol Hill. West Coast senators, including Senate Commerce Committee Chair Maria Cantwell of Washington state, have called on the Federal Trade Commission to investigate possible price manipulation on the West Coast, where prices in California top $6 per gallon.
“Americans have the right to know why one of our most important commodities doesn’t have the right amount of transparency and oversight,” Cantwell said at a hearing Tuesday. Targeting what she called the “mysterious middle of the supply chain,” Cantwell said lawmakers and the FTC should ensure that — as in the 2001 energy crisis spurred by Enron — “there aren’t a bunch of ‘smart guys in the room’ hurting consumers because they think we can’t figure out what is happening.”
Rep. Tim Walberg, R-Mich., blamed Biden for high gas prices, citing cancellation of the Keystone XL oil pipeline and a moratorium on new drilling leases on federal lands. Walberg said he was disappointed that neither Energy Secretary Jennifer Granholm nor any other administration official appeared at the House hearing “to answer for the administration’s failed policies.”
Biden has called on Congress to impose financial penalties on companies that lease public lands but don’t produce oil, a request that so far has been ignored. Biden also invoked the Defense Production Act to encourage mining of critical minerals for batteries in electric vehicles, part of a broader push to reduce use of fossil fuels and address climate change.
“The bottom line is if we want lower gas prices we need to have more oil supply right now,” Biden said last week in announcing the strategic oil release. Higher prices have hurt Biden’s approval domestically and added billions of oil-export dollars to the Russian government as it wages war on Ukraine.
Oil companies have pledged to boost domestic production, but it is growing slowly. Executives point to supply chain and labor constraints as a result of the COVID-19 pandemic, as well as investor demands for returns. They have called for more federal permits to allow additional leases.
Besides Exxon and Chevron, other companies represented at the hearing were Shell, BP, Pioneer Natural Resources and Devon Energy.
The Trucker Staff contributed to this report.
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