A White House adviser says the Biden team is not against oil company profits | Whuff News

Presidential Adviser Amos Hochstein: 'We're not against' oil majors for profit

ABU DHABI, United Arab Emirates – President Joe Biden has made no secret of his frustration with high gas prices and the oil companies profiting from them. With the support of Democratic allies in Congress, he is threatening to impose windfall taxes on energy firms, a prospect fueled by a backlash in the industry.

The president on Monday wrote: “The oil industry has a choice. Either invest in America by reducing prices for consumers at the pump and increasing production and refining capacity. Or pay higher taxes on your large profits and face other restrictions.”

The language establishes what appears to be a standoff between the U.S. oil industry and the Biden administration at a time of high energy prices, inflation and worries about global supply shortages after years of underinvestment in the industry and months of sanctions. on Russian products for the war in Ukraine.

But reports of hostility between the White House and American energy giants are exaggerated, said Amos Hochstein, a special presidential correspondent for Biden, who is in close contact with energy industry leaders domestically and around the world.

The Biden administration is not against profit or free trade, he stressed; rather, it wants to see oil companies reinvest their profits in improving crude production and the country’s energy security.

“I talk to CEOs, some senior members of management talk to CEOs regularly,” Hochstein told CNBC’s Hadley Gamble on Monday, when asked about the management’s relationship with business executives.

“People know that. I don’t think that’s the issue. The issue is this: we want them to increase their capex, increase their investment,” he said. “The price situation of last year, more than a year now, lends itself to investment. So take those profits that you make. We are not against profit. What we want, and the president said last week – take those profits and invest them.

Watch the full CNBC interview with US Presidential Correspondent Amos Hochstein

Congressional Democrats argue that oil executives are prioritizing shareholder returns over reimbursing profits to increase production that could lower consumer prices. Hochstein takes the position that shareholder returns are not an issue for them, but that increasing energy in America should be the priority.

“Do you want to give back to shareholders? Some are good,” he continued. “But not excessively. You want to take these benefits, fine. But not excessively. We are at war and you can do more to increase productivity.”

Report-breaking oil company profits

Many oil companies have made gains this year as consumers grapple with rising gas and power bills. ExxonMobil reported a record $19.7 billion in revenue for the third quarter, and Biden this week accused the Texas-based company of using that to reward shareholders and buy back its stock instead of investing in product improvements that could lower prices at the pump.

California-based Chevron It made $11.23 billion in profit in the third quarter, just shy of the record it reached in the previous quarter. In the last two quarters, Chevron, ExxonMobil, ConocoPhillips and Britannia BP, A shell and France All power is reported to have made more than $100 billion in revenue—more than they earned by 2021.

Exxon Mobil CEO Darren Woods, speaking to CNBC last week, said his company is committed to shareholder returns and productivity improvements, regardless of who is in the White House.

“We are not really looking to satisfy one management or the other. We are looking to make sure that we are doing everything we can by using our shareholders’ money properly, finding profitable projects that allow us to increase production and increase value. We are also looking to reduce our emissions,” he told CNBC “Box of “Squawk.”

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But Hochstein says he doesn’t see enough investment on a broader scale.

“What I’m seeing is record profits that don’t translate into increased investment enough and where investment doesn’t match the average increase in investment to value,” he said.

Many in the oil industry say the tariff is counterproductive and will hurt production and investment. However, the threat of such a tax from the Democratic leadership is more likely to be a pressure tactic than a practical policy proposal in the near term since Congress is not in session. And it may be unlikely that Republicans, who strongly oppose such a move, will win one or both houses in the November midterm elections.

The White House’s Changing Tone on Fossil Fuels

Biden came into office campaigning hard for an end to fossil fuel use and a transition to renewables as part of his climate-focused agenda, imposing a raft of regulations on oil and gas exploration and production. Supporters of Biden’s green energy goals say the aggressive push was needed to reverse what they describe as damage done by former President Donald Trump, who has rolled back years of work on environmental protections and pulled the US out of the Paris Climate Accords.

But it was the policy push, those in the oil and gas industry argue, that spurred investment in production and subsequently led to the energy shortages and high prices we see today. Now, faced with the strengthening of the global energy market, the increase in demand, and the war in Europe, the administration takes a different tone.

“Look, it’s no secret that the Biden administration and oil don’t see eye to eye on the long-term role that oil is going to play in the economy,” Hochstein said. “However, we need to do two things. We need more investment in oil production and refining, now.”

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The long-term energy policy veteran indicated that many of the original rules and restrictions have been eased – and noted that under this administration, the US is approaching epidemic high levels of oil production, although he says there is not enough work from oil companies.

Figures released by the US Energy Information Administration on Monday showed domestic crude oil production hit 11.98 barrels per day in August, the highest since March 2020 and approaching the all-time US record of 12.3 million barrels set in 2019.

Occidental Petroleum CEO Vicki Hollub disputed reports that the Biden administration was ignoring oil companies. Speaking to CNBC in Abu Dhabi, he said he is actually in contact with US Energy Secretary Jennifer Granholm, a climate policy advocate.

“I hear from Secretary Granholm — he’s tech-savvy, he’s passionate about climate change, he’s listening, he’s listening. [communicates with] The National Petroleum Council has sent us requests for studies to help him make his decisions “regarding clean energy investments,” Hollub said.

Whatever the disagreement on the long-term role of the fossil industry in the US, oil managers and White House officials seem to agree on one thing – they will have to communicate effectively to ensure future energy security in the country in a difficult time. economic and political risk.

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