Tell the President and your Senators – Build a Wartime Bridge From Big Oil to a Green Economy
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Call Script
My name is __________. I am a constituent, and my zip code is _______. I am a member of Indivisible SF.
President Biden:
You said it yourself last week: Enough is Enough! Now is not the time for U.S. oil companies to sit on record profits. We appreciate your joining our allies in releasing millions of barrels of oil from our Strategic Petroleum Reserve as a “wartime bridge” for the next six months, but a bridge to increasing domestic oil production takes us backward.
We voted for you to lead us forward to avoid climate catastrophe by rapidly implementing a green economy. We want you to use the Defense Production Act to curb oil and gas company price gouging by imposing price controls, and to provide urgent assistance to ramp up domestic production and implementation of sustainable energy and conservation systems.
Senators:
We appreciate President Biden’s release of one million barrels of oil per day from our Strategic Reserve as a “wartime bridge,” but making that a bridge to increasing domestic oil production takes us in the wrong direction. It’s time for President Biden to use his Defense Production Act powers to put price controls on Big Oil price-gouging and to rapidly increase implementation of renewable energy and conservation technologies nationwide.
We also want you to put additional pressure on oil companies to stop their shameless profiteering by co-sponsoring Senator Whitehouse’s Big Oil Windfall Profits Tax.
Background
We liked the frank way President Biden called out the greed of the oil and gas industry in his address to the American people about gas prices last week. It was refreshing to see our president inject the concept of corporate responsibility into the national dialogue.
We appreciate his plan to release a million barrels a day from our Strategic Oil Reserves. However, he called that action a “wartime bridge” to increased domestic production of oil, and suggested Congress institute a “use it or lose it” policy to impose fines on oil companies who leave idle their 9,000 permitted pumping leases on 12 million acres of public land. It is a clever gimmick to expose Republican lies about the Biden administration squelching domestic oil production, when it has actually been higher under Biden than under Trump, but the price is far too high.
Biden should make the Strategic Oil releases a “wartime bridge” to urgent action on global warming, a much greater and worsening crisis for us than a spike in gasoline prices. He should use his powers under the Defense Production Act to ramp up production and implementation of renewable energy and conservation technologies nationwide. As his administration has pointed out so many times, this would create millions of jobs and instill hope in the millions who rushed to the polls to vote for climate action in 2020.
Biden spoke frankly about Big Oil’s abusive price gouging. His administration should back that up with action: Defense Production Act price controls. We know that the main reason gas prices are spiking is corporate greed, not any actual shortage of crude oil. Oil pricing is manipulated to maximize profits for investors at the expense of consumers. We also know that gas prices started rising before the Ukraine war, because OPEC and Russia deliberately reduced their production for the express purpose of increasing prices. If we increase our domestic production, OPEC and the others will simply cut back more on their output to compensate.
As an added benefit to using the DPA to control oil price gouging, it would signal to other industries that we will not tolerate rampant profiteering by companies determined to undermine the Biden administration. We anticipate that by fall, the Ukraine war will cause a global food shortage, because both Russia and Ukraine were major exporters of food and fertilizer. If Big Oil is allowed to continue its price gouging without constraint, we know that Big Ag will follow suit, jacking up our food costs for excess profits.
This is not the first time in our history that wars and natural disasters like the pandemic have destabilized the economy. During World War II, Roosevelt imposed wartime price controls that effectively constrained inflation to ensure that it never undermined public support for the war. The Defense Production Act (DPA) was enacted during the Korean War to do the same thing. Even Trump (grudgingly) used the DPA at the beginning of the pandemic. With companies padding their profits with opportunistic price gouging, it's time once again for carefully planned strategic price controls.
If Congress is seeking ways to incentivize Big Oil to reduce its price gouging, they could gather more co-sponsors for Sheldon Whitehouse and Rho Khanna’s Big Oil Windfall Profits Tax bill. It would levy a quarterly tax on large oil companies and distribute the revenue to consumers through a quarterly rebate. The per-barrel tax would be equivalent to half the difference between the average pre-pandemic oil price of 2015-2019 and the price today.
Whitehouse’s bill has 12 Democratic co-sponsors, including five Finance Democrats: Sens. Elizabeth Warren, Sherrod Brown, Michael Bennet, Bob Casey, and Debbie Stabenow. Rep. Ro Khanna introduced a House companion measure (HR 7061) that has 14 Democratic co-sponsors, although none are tax writers. “We would like to get a windfall profits tax through as quickly as possible,” Warren told Roll Call. “The oil companies need to understand that the benefits of price gouging will be sharply undercut by a tax that's not across the board, but instead is a tax on how their profits increase during this short-term crisis.”
References
OPEC Warns of Response as Biden Poised for Oil Reserve Release, 11/22/21, Bloomberg
Pricing Controls under the Defense Production Act, National Law Review
Could price controls be the answer to inflation that Biden is seeking? The Hill, 3/17/22
The Dirty Secret of Inflation: Corporations Are Jacking Up Prices and Profits, The Nation
Could strategic price controls help fight inflation? Isabella Weber, The Guardian 12/29/21
Windfall profits tax, consumer rebate options under discussion / Whitehouse bill would levy quarterly tax on large oil companies, Roll Call, 3/24/22
With Gasoline Prices Sky High, Whitehouse Leads Democrats in Introducing Curb on Big Oil Companies Engaged in Profiteering to Provide Relief at the Pump, Sen. Whitehouse, 3/10/22
Biden unveils strongest fuel efficiency rule yet - E&E News, 4/1/22