Democrats take aim at Big Oil in lead up to midterms
Democrats are looking to pin the blame on oil companies for high gas prices, potentially signaling an election-year goal of refocusing scrutiny on an issue that has dogged President Biden’s approval ratings.
Two different House committee chairs have called for oil CEOs to testify on disparities between falling oil prices and consumer gas prices. While three companies rebuffed House Natural Resources Committee Chairman Raúl Grijalva (D-Ariz.), several others are set to testify before the House Energy and Commerce Committee on Wednesday.
“While American families struggle to shoulder the burden of rising gas prices from Putin’s war on Ukraine, fossil fuel companies are not doing enough to relieve pain at the pump, instead lining their pockets with one hand while sitting on the other,” Energy and Commerce Committee Chairman Frank Pallone Jr. (D-N.J.) and investigations subcommittee Chairwoman Dianna DeGette (D-Colo.) said in a statement Tuesday.
“It’s time we get to the bottom of why oil companies are content to watch Americans suffer so that their shareholders and executives can reap enormous profits. Our Committee looks forward to getting answers from these companies next week.”
Some oil industry analysts have pushed back on Democratic accusations, pointing to the so-called rocket and feather phenomenon, in which gas prices typically rise quickly in accordance with the price of oil but are slower to drop in response to oil dips.
The relationship between oil and gas prices is “a very loaded, complex issue,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
Gas stations “are often about three to four days behind on fully passing increases along, and prices then go down more slowly because stations try to recoup margins they lost when prices went up,” De Haan told The Hill.
Moreover, De Haan said, stations are reluctant to lower prices in response to oil dips that may not last.
“The last thing they want to do is lower their price 5 or 10 or 15 cents a gallon one day, if they can even afford it … only for prices to jump right back up the next day,” he said.
But regardless of industry trends, both congressional Democrats and Biden have frequently accused major oil companies of price gouging and, since the Ukraine conflict began, accused them of continuing to profit from the conflict while allowing American consumers to bear the burden of higher costs.
A bicameral bill sponsored by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.) would tax major oil companies on windfall profits and provide rebates to Americans from the proceeds.
“What we’ve seen as a result of the Russian invasion is a lot of speculation and cartel behavior that has dramatically raised oil and gas prices,” Whitehouse said at a press conference Wednesday afternoon. “Note that the costs did not change, there has not been a similar spike in cost to match the spike in price. … This is a price increase of choice on the part of the big oil companies.”
Congressional Democrats have demanded answers from oil executives before, most notably in a House Oversight and Reform Committee hearing in late 2021 examining the extent to which they were aware of the connection between burning fossil fuels and climate change.
The latest push differs in one key aspect, however: with the 2022 midterm elections approaching, voters are likely to blame the party in power for pain at the pump, if they don’t blame oil companies.
Incumbent parties — and presidents — typically take a popularity hit from gas price increases, although prices are determined by a confluence of factors that are mostly beyond the president’s control.
The Energy and Commerce Committee hearing will come only a few months after the Oversight and Reform Committee hearing. Rep. Katie Porter (D-Calif.), a member of both the Oversight and Natural Resources panels, told The Hill more Oversight hearings in which CEOs would be asked to testify specifically on gas prices are currently under discussion.
“We had them in under Rep. Khanna’s leadership to talk about climate change disinformation, and I think it’s entirely appropriate to have them back,” she said.
Rep. Dina Titus (D-Nev.), meanwhile, introduced legislation earlier this month with Rep. Peter DeFazio (D-Ore.) that would create a windfall profit tax on oil companies for adjusted taxable income (ATI) this year more than 110 percent greater than average pre-pandemic ATI.
Asked if voters will be receptive to the idea of oil companies as the source of their woes, Titus told The Hill, “I believe so.”
“Big corporations are not very popular these days,” Titus added. She pointed to the number of unused drilling permits, saying companies have “taken advantage of the war to raise prices as opposed to using all those licenses that they already have to drill that are just sitting there unused.”
The White House has emphasized the permitting gap as well, with both Biden and White House press secretary Jen Psaki repeatedly emphasizing the 9,000 currently unused oil drilling permits.
Sen. Richard Blumenthal (D-Conn.), one of the Khanna-Whitehouse bill’s Senate co-sponsors, expressed confidence the message would resonate with Americans.
“I think the American people are really outraged,” he told The Hill. “They want these big oil companies to be taxed to get some money back in their pockets.”