'We're not against profits,' White House advisor says after Biden's tax threats on oil companies

ABU DHABI, United Arab Emirates — President Joe Biden is making nary concealed of his vexation with precocious state prices and the lipid companies making grounds profits arsenic a result. With the enactment of Democratic allies successful Congress, helium is threatening to levy windfall taxes connected vigor firms, a imaginable that's prompted backlash from the industry.

The president connected Monday tweeted: "The lipid manufacture has a choice. Either put successful America by lowering prices for consumers astatine the pump and expanding accumulation and refining capacity. Or wage a higher taxation connected your excessive profits and look different restrictions."

The connection sets up what looks similar a standoff betwixt the U.S. lipid manufacture and the Biden medication astatine a clip of precocious vigor prices, soaring ostentation and worries of a planetary crude proviso shortage aft years of under-investment successful the manufacture and respective months of sanctions connected Russian commodities for its warfare successful Ukraine.

But reports of animosity betwixt the White House and America's vigor giants are overhyped, says Amos Hochstein, Biden's peculiar statesmanlike coordinator, who liaises intimately with vigor manufacture leaders domestically and astir the world.

The Biden medication is not anti-profit oregon anti-free market, helium stressed; rather, it wants to spot lipid companies reinvest their profits successful improving crude accumulation and the country's vigor security.

"I speech to the CEOs, different elder members of the medication speech to the CEOs connected a regular basis," Hochstein told CNBC's Hadley Gamble Monday, erstwhile asked astir the administration's narration with manufacture executives.

"People cognize that. I don't deliberation that's the issue. The contented is this: we privation them to summation their capex, summation investment," helium said. "The terms situation for the past year, implicit a twelvemonth now, lends itself to investment. So instrumentality those profits that you're making. We're not against profits. What we bash want, and the president said this past week — instrumentality those profits and put them."

Congressional Democrats reason that lipid executives are prioritizing shareholder returns implicit reinvesting profits toward boosting accumulation that could little user prices. Hochstein held the presumption that shareholder returns are not an contented successful themselves, but that expanding America's vigor supplies should beryllium the priority.

"You privation to wage immoderate backmost to shareholders? Some is fine," helium continued. "But not excessively. You privation to instrumentality these profits, that's good too. But not excessively. We're successful a warfare and you tin bash much to summation production."

Several large lipid companies person raked successful grounds profits this twelvemonth arsenic consumers grappled with soaring state and vigor bills. ExxonMobil reported a grounds $19.7 cardinal nett profit for the 3rd quarter, and Biden this week accused the Texas-based institution of utilizing that to reward shareholders and bargain backmost its ain banal alternatively than investing successful accumulation improvements that could easiness prices astatine the pump.

California-based Chevron made $11.23 cardinal successful profits successful the 3rd quarter, conscionable shy of the grounds it deed successful the erstwhile quarter. In the past 2 quarters, Chevron, ExxonMobil, ConocoPhillips and Britain's BP, Shell and France's TotalEnergies reportedly made implicit $100 cardinal successful profits — much than they earned successful the entirety of 2021.

Exxon Mobil CEO Darren Woods, speaking to CNBC past week, said his institution was committed to addressing some shareholder returns and improving production, careless of who was successful the White House.

"We don't truly look to fulfill 1 medication oregon the other. We look to marque definite we're doing the champion we tin utilizing our shareholders' wealth appropriately, uncovering advantaged projects that let america to turn accumulation and turn value. We're besides looking astatine reducing our emissions," helium told CNBC's "Squawk Box."

But Hochstein says helium doesn't spot capable concern connected a wide scale.

"All I spot is grounds profits that are not translating to sufficiently accrued concern and wherever investments are not keeping up with mean ratios of investment-to-price increase," helium said.

Many successful the lipid manufacture reason that a windfall taxation is counterproductive and would harm accumulation and investment. Still, the menace of specified taxes from the Democratic enactment is apt much of a unit maneuver than a plausible argumentation connection successful the near-term since Congress is not successful session. And it could adjacent go intolerable to transportation retired if Republicans, who mostly reason specified a move, triumph 1 oregon some houses successful the November midterm elections.

Biden came into bureau campaigning hard for an extremity to fossil substance usage and a modulation to renewables arsenic portion of his climate-focused agenda, laying retired a bevy of regulations connected lipid and state exploration and production. Supporters of Biden's greenish vigor goals accidental this assertive propulsion was needed to reverse what they picture arsenic harm done by erstwhile President Donald Trump, who rolled backmost years of enactment connected biology protections and pulled the U.S. retired of the Paris Climate Accords.

But it was that argumentation push, those successful the fossil substance manufacture argue, that helped throttle concern successful lipid and state accumulation and subsequently led to the vigor proviso shortages and higher prices we spot today. Now, faced with a tightening planetary lipid and state market, climbing demand, and a warfare successful Europe, the medication is taking a antithetic tone.

"Look, it's nary concealed that the Biden medication and lipid manufacture bash not spot eye-to-eye connected the agelong word relation that lipid volition play successful the economy," Hochstein said. "However, we person to bash 2 things. We request much concern successful lipid accumulation and refining, now."

The longtime vigor argumentation seasoned pointed retired that overmuch of the archetypal regulations and restrictions person eased — and noted that nether this administration, the U.S. is approaching pre-pandemic highs successful lipid accumulation levels, adjacent contempt what helium says is insufficient enactment from lipid companies.

Figures released by the U.S. Energy Information Administration connected Monday revealed home crude lipid accumulation hitting 11.98 barrels per time successful August, the highest since March 2020 and nearing the U.S.'s all-time grounds of 12.3 cardinal barrels acceptable successful 2019.

Occidental Petroleum CEO Vicki Hollub contradicted the communicative that the Biden medication was ignoring lipid companies. Speaking to CNBC successful Abu Dhabi, she said she so communicates with U.S. Energy Secretary Jennifer Granholm, a vocal clime argumentation advocate.

"I bash perceive from Secretary Granholm — she is focused connected tech, she's enthusiastic astir the clime transition, she listens, she [communicates with] the National Petroleum Council and has sent america requests for studies to beryllium conducted to assistance her successful making her decisions" concerning cleanable vigor investments, Hollub said.

Whatever the disagreements connected the longer-term relation of the fossil substance manufacture successful the U.S., lipid executives and White House officials look to hold connected 1 happening — they volition request to pass decently to guarantee aboriginal vigor information for the state astatine a clip of terrible economical and geopolitical risk.