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Is a Biden Oil Tax Coming?

Biden said that his administration is prepared to use “all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term.”

“Since the beginning of the year, refiners’ margins for refining gasoline and diesel have tripled, and are currently at their highest levels ever recorded,” he said.

Biden noted that the last time oil was trading at $120 per barrel the average price of gas at the pump was about $4.25 per gallon.

Oil prices fell after Biden’s letter was released, with West Texas Intermediate, the U.S. benchmark, recently trading down more than 1% at $117.71.

The president’s letter was also addressed to global giants BP and Shell, as well as refiners Marathon Petroleum, Valero Energy and Phillips 66. Shares of Exxon, Chevron and the refiners were all down slightly in premarket trading.

Yes Boyobach, I’m looking at a similar Shell price chart to yours. I’m having my doubts & breach of downward price levels likely results in lower share price levels. The trigger likely to be central bank policy. Inflation getting more ingrained now, demand pull & cost push with upwards inflationary spirals. So the Fed must aggressively tame inflation!

US Fed to expect raise 0.75% today. Worry for global recession. That’s pushing down Brent, Oil shares. If Fed seen too aggressive Shell could fall to below 2200p. Markets fretting again.

Exacerbating the price pressure is tightening oil supply due to reduced imports from Russia. Goldman Sachs (NYSE:GS) predicts Brent crude oil prices to average $140 between July and September, a 16% increase from current levels.

Credit Suisse starts Shell coverage with 3000p target price.

Goldman Sachs raise their projections for WTI and Brent again. GS citing supply shortfalls. Say that Brent crude will need to average $135 / barrel in the back half of 2022 and into the first half of 2023 for invetory to normalise in H2 of 2023.

I see Shell shares as a trading stock. I’ve made decent profits trading these but timing of buys/sells I’ve been wrong footed like most investors. Still I made £5K profits in a week, few weeks back. So like most shares nowadays it’s a trading opportunity on market volatility but carries risk/rewards. Shares previously I owned have sunk by 40-80 %, Footsie 100’s incl Property, Consumer & Industrials. Oil has been up and down with oil shares following oil price trends. I did sell out near highs but lucky escape. So I’m not sure about long term share holds in a declining shares market globally & with inflation hitting around 10%.

Upwards to £26 now. Shell can offset most of WFT by making more North Sea investments/ others. That’s what some media reporting too. Then Brent oil up on supply constraints, Russia ban deal by Europe hopes etc …

I think 25% tax levy on Shell U.K. profits as they are linking tax to incentive U.K. oil & gas investments. This tax rate is better than another 40% on top of corporate tax rate. Then Shell’s tax rate reduces on new U.K. investments. Shell’s accountants going to reduce tax take even more. So we knew it was coming but better than I expected. So clear the decks, Shell free to make choices without any more Windfall tax as one off temporary tax levy. I think this is positive & shares should rise hopefully.

Shell’s go ahead new North Sea investments should reduce tax take. How is 25% tax levy going to be calculated. See what analysts say about this? What £’s cost to Shell?

BREAKING
Sunak confirms tax on profits of oil and gas companies
Rishi Sunak announces the government will introduce a temporary levy on the profits of oil and gas companies at a rate of 25%.

He says the sector is making "extraordinary profits" due to surging global commodity prices driven in part by the war in Ukraine.

The chancellor says these profits must be taxed fairly and incentivise investment.

The levy will be phased out when prices return to more normal levels and the more a company invest the less tax they will pay.

I buy back Shell shares yesterday. Think WFT hit may only affect U.K. profits. Then Shell’s new investments in North Sea approved yesterday. Makes sense to consider this in tax levy.

Gas prices. Relentless rise continues. Highest since 2008.
Cost of living, help consumers! Question is how big WFT levy to come?

Natural gas surged above $9 per million British thermal units, or MMBtu, on Wednesday, hitting the highest level in more than a decade as dwindling inventories push prices higher.

U.S. prices surged more than 6% at one point to hit a high of $9.399 per MMBtu, the highest since August 2008

I’m taking profits from Shell shares. Windfall Tax likely fall in Energy Company Shares. Maybe bad or good for Shell, depends on tax levy. Nobody really knows. So I sold majority of my shares but kept a position.

Shell is best place to handle WFT. It’s a globally diverse oil major so analysts saying it can take the windfall tax hit. Oil companies are already paying highest corporate taxes. I’m hoping for a lesser penal tax. Then a relief rally for Shell shares upwards to £25 coming.

So the oil companies may escape WFT. Too right Electricity Generators get the WFT. Here’s the Financial Times news story:

Britain's finance minister Rishi Sunak has ordered officials to draw up plans for a possible windfall tax on more than 10 billion pounds ($12.58 billion) of excess profits by electricity generators, including wind farm operators, the Financial Times reported on Monday.

Treasury officials are working on a scheme that would go well beyond Labour's original windfall tax plan, the report said.

SocGen upped to 2700p BUY today. Up from 2200p previous.

2400p near

A Labour amendment to the Queens Speech asking for a new tax on oil & gas producers was defeated by 310 votes to 248, a majority 62 and not supported by any Conservative MP. So I don’t think this Windfall Tax is on immediately on the agenda. Maybe Sunak revisits this in the Autumn, who knows? Something should be done more to help struggling people with their energy bills for sure.

Brent Crude going up, recovering losses.