Liberal groups are pressing Democrats to go beyond their current anti-price gouging efforts and more aggressively target energy companies' profits to stave off record gasoline prices.

The House passed the Consumer Fuel Price Gouging Prevention Act on Thursday, which would authorize the president to declare an energy emergency prohibiting sales of consumer fuel at an "unconscionably excessive" price and charge the Federal Trade Commission with enforcement. But several groups want the party to prioritize a windfall profits tax to cut into companies' earnings during periods of high oil prices.

A NEW FIVE-YEAR OFFSHORE LEASING PROGRAM IS TO BE FILED BY JUNE 30, HAALAND SAYS

Collin Rees, U.S. program manager for environmental outfit Oil Change International, called passage of the gouging bill "a great start" and said the Senate should pass it immediately, as the national average per-gallon price of gasoline stands at a fresh record of $4.491.

"But enhanced investigatory powers won't be enough to stem Big Oil's greed and stop its exploitation — the House must move rapidly to tax the fossil fuel industry's record windfall profits," Rees said in a statement.

Energy companies of varying sizes are cashing in big on high oil prices. Independent producer Diamondback Energy netted $779 million during the first quarter of the year. Although not a record, that total amounts to more than 3.5 times what the company earned during the same period in 2021, when crude oil prices ranged from about $50 to $64 per barrel.

Integrated oil majors ExxonMobil and Chevron posted quarterly profits of $5.5 billion and $6.26 billion respectively.

Tyson Slocum of the watchdog group Public Citizen noted, as many industry players have, that oil markets, rather than individual companies, set crude prices. But, he said, company actions do determine profit margins, as well as whether cash gets returned to investors or spent on additional production.

"When the market price of your commodity far exceeds your cost to produce and procure that commodity into the market, you're going to pocket massive profits," Slocum, who is Public Citizen's energy program director, told the Washington Examiner.

While some energy companies have said they are responding to high prices by investing in additional oil production, some have said outright they are sitting tight.

In its recent earnings report, Diamondback Energy said that company leaders "do not feel that today is the appropriate time to begin spending dollars that would not equate to additional barrels until multiple quarters from today given the uncertainty and volatility currently in the market."

Devon Energy, which reported net earnings of $1 billion for the quarter, said it is "committed to a disciplined maintenance capital program" and that it has not amended its plan to sustain production of between 570,000 to 600,000 barrels per day.

Slocum said a windfall profits tax is "actually the more appropriate path here because it is addressing the market failure that is being caused by the situation."

He said, "If you're not going to be reinvesting your capital gains into things that are going to help the economy deal with this inflationary problem, then we can extract some of that record profit and invest it in things that will address some of these problems, or provide relief to consumers."

Congressional Democrats have put forward a windfall profits tax proposal since the war in Ukraine. The Big Oil Windfall Profits Tax Act, introduced by Sen. Sheldon Whitehouse (D-RI) on March 11, would target profits of oil companies that produce or import at least 300,000 barrels of oil per day with a per-barrel tax equal to 50% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019.

Revenues would then be given to drivers in the form of rebates.

Rep. Ro Khanna (D-CA) introduced a companion version in the House, too, although neither version has seen movement through its respective chamber.

Meanwhile, oil-industry groups and some independent analysts have challenged the gouging theory, arguing that a shortage of refining capacity and strong consumer demand are straining gasoline supply and driving prices upward.

"There is no overnight fix for this," said Patrick De Haan, a petroleum analyst for GasBuddy. "There's no fix this year. There's no fix next year. The only fix is somehow if there could be a balance between supply and demand."

In other cases, trade groups have pointed to labor shortages caused by industry contraction during the pandemic, as well as supply chain constraints, for limiting the scale of output increases.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

Demand destruction wrought by the coronavirus pandemic slammed the U.S. oil and gas industry, which lost some 200,000 jobs during the pandemic period, or 20% of the entire workforce, according to analytics firm Rystad Energy.

The group estimates that employment in the sector will rise to 971,000 this year, still short of the 1.07 million employed in the industry in 2019.

All the while, oil production has risen under President Joe Biden, despite his administration's policies to reduce future growth of the sector, such as its shrinking by 80% the amount of acreage available for oil and gas leases through its sale.