Top congressional Democrats on Thursday pledged to penalize oil and gas giants that they say are unfairly raising prices at the pump, part of a broader effort to blunt the financial and political fallout from soaring inflation.
To ease the strain on Americans’ wallets, Democratic leaders have focused their efforts on price gouging, arguing that oil and gas conglomerates have manipulated markets to pad their bottom lines. Companies including BP, Shell and ExxonMobil have posted massive profits in the past two quarters, dazzling investors and infuriating party lawmakers, who say drivers are being squeezed to produce those profits.
In response, Democrats aim to empower the Federal Trade Commission, a government watchdog agency, to investigate energy price-setting practices. They touted their plans at a news conference Thursday, where the bills’ chief authors — Sen. Maria Cantwell (D-Wash.) and Rep. Frank Pallone Jr. (D-N.J.) — said their forthcoming measure would open the door for federal regulators to impose fines and other punishments for potential abuse.
“There’s no excuse for big oil companies to profiteer, to price gouge or exploit families,” added House Speaker Nancy Pelosi (D-Calif.).
The bill is part of a battery of existing and expected legislation targeting the energy sector. This week, Senate Majority Leader Charles E. Schumer (D-N.Y.) privately encouraged Democrats to craft additional proposals that enhance federal enforcement. An array of Democratic lawmakers — including Sens. Ron Wyden (Ore.), Elizabeth Warren (Mass.) and Tammy Baldwin (Wis.) — are finalizing measures that would impose steep fines for abuse, crack down on corporate consolidation or set up new taxes on oil and gas companies’ profit windfalls.
Some in the party even are pushing to adopt the bills before Memorial Day weekend, a travel-heavy holiday that marks the beginning of summer. Some Democrats also have discussed whether to suspend the roughly 18-cent-per-gallon federal gasoline tax, a step that Rep. Hakeem Jeffries (D-N.Y.) described at a news conference Wednesday as “part of the discussion” of a more “comprehensive” solution to rising prices. A day later, though, Democratic leaders expressed deep doubts about the merits of such a move.
Democrats hope they ultimately can mount an effective and swift policy response to an economic quandary that looms over this fall’s midterm elections. Gasoline on Thursday morning averaged about $4.14 per gallon nationally, according to AAA, a marked departure from the roughly $2.89 average one year ago.
Even if this legislative push fails, though, Democratic leaders sense a political opportunity: They say they can demonstrate their commitment to tackling inflation while portraying Republicans — if they try to block the forthcoming bills — as preventing Congress from addressing Americans’ urgent financial needs.
“When the bills hit the floor, Republicans will face a dilemma,” Schumer said Thursday, promising to bring the legislation to a vote. “Which side are they on? The consumer, and lowering gas prices? Or the side of Big Oil?”
The root causes of the country’s recent burst of inflation are varied and complicated. They stem from an ever-changing coronavirus pandemic, a major disruption to global supply chains and a shortage of foreign oil made worse by Russia’s invasion of Ukraine. No matter the causes, President Biden personally has pledged to make the fight against inflation his “top priority” in a critical election year.
But GOP lawmakers have insisted that Democrats are most to blame, accusing them of profligate spending that has overheated an economy that shrank in the first quarter of 2022, according to new figures released by the federal government earlier Thursday.
“I don’t think the American people want gimmicks,” said Rep. Kevin Brady (Tex.), the top Republican on the tax-focused House Ways and Means Committee. Brady instead called for a more permissive drilling policy, which he described as “a signal from this administration” that might result in more oil and gas and fewer price increases on the horizon.
Privately, House Democrats discussed their options to combat inflation at a caucus-wide meeting Wednesday morning. They focused on early legislative efforts targeting the rising costs of food, fertilizer and gasoline, according to a senior Democratic aide who spoke on the condition of anonymity to describe the gathering.
In the Senate, meanwhile, Democrats held an initial hearing this week on two proposals that seek to combat rising meat and poultry prices. And both parties continued their work on bills intended to reduce the cost of insulin. A measure capping patients’ out-of-pocket payments at $35 cleared the House last month, although bipartisan negotiations still are underway in the Senate.
But the immediate concern has been the sharp increase in energy prices, which has become top of mind for Democratic leaders working to retain their narrow majorities in the House and Senate this November.
“I think you’ll see us take a number of steps to address gas prices. I think the biggest consensus right now that we’re hearing from voters is the need to hold Big Oil companies accountable,” said Rep. Sean Patrick Maloney (D-N.Y.), the chief of the Democratic Congressional Campaign Committee. “You’ll see action in that regard.”
In a sign of the stakes, Pelosi huddled Tuesday with Schumer to discuss potential measures to lower fuel costs. Speaking on the chamber floor a day later, Schumer swatted at the oil and gas industry for raking in $205 billion in profits last year “even while Americans pay more.”
Some Democrats have focused their attention on pausing the federal gasoline tax, an idea that has been championed by Sens. Mark Kelly (D-Ariz.) and Maggie Hassan (D-N.H.), both facing tough reelection fights this year. The duo unveiled a bill in February that would suspend the tax into January.
The idea initially drew some interest at the White House, which said at the time that all options were on the table in response to rising energy costs. Asked about it Wednesday, White House press secretary Jen Psaki told reporters that Biden is “open to a range of options, including a federal gas tax holiday.”
Yet, some prominent Democrats remain unconvinced of its effectiveness. Pelosi publicly has expressed skepticism, arguing that there is no guarantee energy companies would not try to pocket the savings by raising prices once the gas tax has been paused. The House speaker echoed that concern during Democrats’ caucus meeting Wednesday, according to the senior party aide.
“We want to provide people relief at the gas pump. We don’t want to provide a windfall for the oil companies,” said Rep. Jim McGovern (D-Mass.) after the meeting.
On Thursday, Pelosi described a gas tax holiday as “good PR,” but told reporters that she had a number of concerns, including the fact there is “no guarantee that the reduction in the federal tax would be passed on to the consumer.”
Republicans have aired their own objections, noting the federal gasoline tax funds the government’s key program for financing road, bridge and highway construction. A holiday would essentially “short” that critical infrastructure program, while the market pressures mean the “cost doesn’t come down” for consumers, said Sen. Kevin Cramer (R-S.D.).
Asked about alternative solutions, Cramer said the “price itself will [fall] eventually because it will shrink demand.”
Other Democrats have trained their scrutiny on price gouging, arguing that the cost of a gallon of gas should be lower, especially since Biden has released millions of barrels of oil from the country’s reserves in recent months.
In the House, a quartet of members last week unveiled a bill to help the Federal Trade Commission investigate price gouging in the gas market while reporting to Congress on potential long-term legislative fixes. In the Senate, some Democrats are readying proposals for release as soon as this week.
The forthcoming bill from Cantwell and Pallone aims to give the FTC new authority to monitor the trade in crude oil, gasoline, home heating oil and related products, with massive penalties for those who manipulate the markets to inflate prices. The lawmakers pledged soon to advance the proposal through the committees they share, fretting that oil companies now are “ripping off the American people.”
“We want to do everything we can to make sure we’re protecting them,” Cantwell added.
Another bill, from Warren and Baldwin, would take aim at price gouging more broadly — prohibiting excessive increases after natural disasters, public health crises, national security incidents or other major economic shocks. The bill also proposes new resources for the federal government to crack down on monopolies, according to a Senate aide, who spoke on the condition of anonymity to describe a measure that has not yet been formally introduced.
And Wyden, who oversees the tax-focused Senate Finance Committee, is finalizing legislation that would impose a windfall-profits tax on the oil industry while limiting stock buybacks, according to a spokeswoman.
The FTC has promised to act aggressively to probe potential price gouging and other anti-competitive conduct. Agency Chairwoman Lina Khan wrote to the White House last August to outline her agenda — including efforts to “deter unlawful mergers” and “investigate abuses” that may give national chains unfair advantages over gas station franchises. Biden later called on the FTC to investigate “anti-consumer” behavior in the energy sector.
But congressional Democrats still say they must further enhance the agency’s effectiveness — including by voting to confirm Alvaro Bedoya as a fifth commissioner at the FTC. The agency is deadlocked at two Democrats and two Republicans.
The Senate intended to vote on Bedoya’s nomination this week until a coronavirus outbreak sidelined Democratic lawmakers and Vice President Harris, their tiebreaking vote in the chamber, leaving the party no choice but to delay it. Schumer promised Wednesday that “health issues will not deter us” from holding the vote soon.
An earlier version of this article incorrectly said the House had passed legislation about insulin prices this month. The bill passed on March 31. The article has been corrected.