Biden’s new budget cuts $31 billion in tax breaks for oil companies

President Biden’s 2024 budget released Thursday includes yet another broadside from the White House against oil companies.

The budget proposal — which Republicans have said is going nowhere on Capitol Hill — would scrap tax breaks that oil and gas companies currently enjoy and save the U.S. Treasury about $31 billion over the coming decade.

“This year’s budget cuts the deficit by nearly $3 trillion over the next decade by asking the wealthy and big corporations to begin to pay their fair share and by cutting wasteful spending on Big Pharma, Big Oil and other special interests,” said Shalanda Young, Biden’s budget chief, on Thursday.

The proposal would repeal a host of credits that oil giants currently enjoy such as an enhanced oil recovery credit to a credit for gas produced from marginal wells. The proposal would also touch other areas important to the energy sector from drilling costs and geological amortization to expensing of mine exploration costs.

The biggest-ticket item would be the repeal of a credit around the use of percentage depletion — a form of depreciation for mineral resources — for oil and natural gas wells. That provision alone, the White House says, would save the Treasury nearly $14 billion over the next decade.

‘They invested too little of that profit’

Thursday’s announcement is just the latest swipe from the White House against energy companies that, Biden officials often claim, had record profits in 2022, but then used that money for stock buybacks instead of lowering prices at the pump.

“They invested too little of that profit to increase domestic production,” President Biden recently said in his State of the Union address.

Big oil companies did enjoy sky-high profits in 2022. The five big oil majors posted a record annual net profit after Russia’s invasion of Ukraine sent crude prices close to $130 per barrel. All told, Chevron (CVX), ExxonMobil (XOM), Shell (SHEL), BP (BP), and TotalEnergies (TTE) posted a net profit of almost $180 billion.

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And Chevron and Exxon recently raised the ire of the White House by announcing stock buyback plans this year, leading the White House to criticize the companies by name.

Assistant Press Secretary Abdullah Hasan recently reacted to Chevron’s earnings report by saying “the only thing getting in the way [of increased production] is their own decision to keep plowing windfall profits into the pockets of executives and shareholders instead of using them to boost supply.”

But oil officials are quick to note that the banner 2022 came after record losses in 2020 during a price crash that year, leading many energy CEOs to be wary of quickly ramping up production now even with the current high energy prices.

Ben Werschkul is Washington correspondent for Yahoo Finance. Ines Ferre contributed reporting.

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