As House Committee Discusses Energy Profits, ‘Profits Taxes’ Remain the Wrong Answer

The House Committee on Oversight and Reform’s Subcommittee on the Environment is set to hold a hearing Thursday to question U.S. energy suppliers on their profits. It is likely that Democrats will try to frame the U.S.-based companies as the “Big Bad Wolf” of the inflation problem, since in recent months these producers have seen demand for energy at an all time high and thus have turned a profit by ensuring Americans had access to that energy. 

The rise in gas prices has very little to do with executives at the big energy firms and a lot to do with policymakers’ campaign to restrict and reduce American energy providers from increasing energy production. On President Biden’s first day in office he set the tone  by canceling the Keystone Pipeline, which could have moved 510,000 barrels of oil per day if allowed to be completed.

The Administration has also restricted the leasing and permitting of drilling on federal lands, and Congress has attempted to reclassify wastewater as a hazardous material and implement a series of other bad policy proposals that would undermine the industry and create a series of unintended consequences. One particularly onerous proposal has been to implement a windfall profit tax on the energy providers in our country. Such a tax would  limit supply at a time when demand is high and increasing supply is of the utmost importance. 

The hearing will also be used to test energy suppliers’ commitment to climate change pledges and programs they have committed to, with a special emphasis on companies that have not taken the proper steps that scientists say are needed to prevent the worst impacts of climate change. NTU has often advocated on behalf of what is called resiliency spending – investing in new or improved infrastructure to better prepare for potential climate-related disasters so long as those investments are paid for and are not contributing to our national debt. We are proud members of the SmarterSafer Coalition, a group of organizations across the ideological spectrum that advocates for investing in resilience. 

Instead of dragging U.S. energy suppliers in front of the Oversight Committee to shame them, Congress should be focused on real world solutions to boost American energy independence and mitigate rising costs through increased supply. 

Recently, a coalition of 26 consumer groups, think tanks, and taxpayer advocacy organizations urged Washington leaders to steer away from a windfall profits tax and other counterproductive policy proposals. That advice is needed now more than ever, and Congress should listen if they wish to improve the energy crisis soon. We have provided Congress with a foundational roadmap of policies that can increase supply and protect America from the global ebbs of the energy industry.