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Biden Threatens Big-Oil 'Windfall Tax' as Profits Surge

“It’s time for these companies to stop war profiteering, meet their responsibilities in this country and give the American people a break," said President Biden

President Joe Biden has taken another short across the bow of Big Oil this week, accusing them of making "a windfall of war" that powered record profits but left Americans paying more for gas and home heating while further stoking the country's inflation pressures. 

In remarks to reporters at the White House late Monday, Biden threatened to ask Congress to raise taxes on oil companies unless they used those profits to boost production and lower overall retail costs.

“My team will work with Congress to look at these options that are available to us and others,” Biden said. “It’s time for these companies to stop war profiteering, meet their responsibilities in this country and give the American people a break and still do very well.”

"If they don’t, they’re going to pay a higher tax on their excess profits, and face other restrictions," he added. 

Biden's comments came just a few hours ahead of another bumper set of third quarter profits from British oil giant BP Plc BP, which earned around $8.15 billion from the ongoing surge in crude and gas prices, boosted its dividend by 10% and vowed to expand its share buyback plans by around $10 billion.

BP said it will pay around $800 million, however, to satisfy a so-called 'windfall tax' on the group's North Sea operations. The 25% levy, introduced in Britain earlier this year, could extend into 2023 -- at a higher rate of 30% -- under plans reportedly begin prepared by new finance minister Jeremy Hunt.

Saudi Arabia's Aramco -- unencumbered by any discussion of a windfall tax in the Kingdom -- posted net income of $42.4 billion over the three months ending in September, a near 40% increase from the same period last year, and suggested that its bottom line won't be threated by low carbon pivots anytime soon.

"While global crude prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade given the world's need for more affordable and reliable energy," said Aramco CEO Amin Nasser.  

Exxon Mobil  (XOM) - Get Free Report and its smaller rival Chevron  (CVX) - Get Free Report posted combined net income of just over $31 billion for the three months ending in September, taking their collective nine-month total to around $72.4 billion -a figure that still falls well shy of the combined $116.2 billion in net income from Apple  (AAPL) - Get Free Report and Microsoft  (MSFT) - Get Free Report -- the two biggest tech companies -- over the same period.

Both Exxon and Chevron, unsurprisingly, pushed back at the idea of paying a steeper rate of tax on their quarterly profits, with Exxon CEO Darren Woods telling investors last week that its dividend increase was tantamount to payout to the American people. 

“There has been discussion in the U.S. about our industry returning some of our profits directly to the American people,”  Woods said. “In fact, that’s exactly what we’re doing in the form of our quarterly dividend.”

Exxon shares were marked 1.5% higher in pre-market trading to indicate an opening bell price of $112.50 each, a move that would extend the stock's year-to-date gain to around 83.8%. Chevron, which is up 52% for the year, gained 1.82% to $184.20 each.