President Biden’s decision to upend the progress made in the energy sector over the last few months by threatening to tax producers for their profits, is exactly what we do not need as we head into a winter where affordable, plentiful energy will be vital for so many parts of the country. According to the American Automobile Association, the average cost of a gallon of regular gas in the United States is $3.76, lower than all-time highs over $5 in June. A harsh new tax could slow or even reverse this trend.
Windfall taxes never work. They did not work in the Carter Administration and they won’t work now. By taxing profits, President Biden will be incentivizing less, not more, production of oil and gas, lowering the available supply and driving the price of oil higher. Furthermore, as we are still in the throes of a yet undefined diesel shortage, now is a particularly harmful time to be considering measures that would deter investment and increased production. According to the Energy Information Administration,the US only has 25 days worth of reserve diesel available.
Windfall taxes are not a new idea. NTU along with 25 organizations representing a broad spectrum of Americans penned a letter outlining the negative effects of proposals like President Biden’s last August. If Congress is serious about ensuring access to energy they should stand against any punitive windfall tax proposals and instead focus their efforts on increasing supply, which will inevitably lower prices.