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FirstFT: Biden accuses Big Oil of ‘profiteering’

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US president Joe Biden accused oil companies of “profiteering” from Russia’s invasion of Ukraine as he threatened them with legislation to impose a windfall tax unless they increased their output.

His comments come days after the oil and gas producers, including ExxonMobil and Chevron, reported enormous profits, and a week before crucial midterm elections in which the price of petrol has put fellow Democrats on the defensive.

There was further evidence today of the windfall global oil companies are receiving from the high oil prices following Russia’s invasion of Ukraine.

BP announced more share buybacks after reporting profits more than doubled in the third quarter to $8.2bn from $3.3bn a year earlier. Profits at Saudi Aramco, the state-controlled company, rose nearly 40 per cent to $42.4bn from $30.4bn a year ago.

The oil industry in America has resisted calls for a windfall tax on profits. Darren Woods, Exxon’s chief executive, said last week that his company was returning profits to Americans in the form of dividend payments.

“Increasing taxes on American energy discourages investment in new production, which is the exact opposite of what is needed,” said Mike Sommers, chief executive of the American Petroleum Institute.

Biden has repeatedly called on producers to use their profits to invest in boosting output. But Wall Street has pressed oil companies to return cash to shareholders instead.

The president said his administration would work with Congress to formulate potential policy responses. But any legislation to impose new taxes on the oil industry faces slim odds, especially in the closely divided Senate.

“At a time of war, any company receiving historic windfall profits like this has a responsibility to act beyond the narrow self-interest of its executives and shareholders,” Biden said yesterday.

US petrol prices hit record levels of more than $5 a gallon this summer. They have since fallen, but remain more than 60 per cent higher than when Biden took office amid robust oil consumption and constraints on global supplies.

Do you agree with Joe Biden? Is it time to introduce a windfall tax on big oil companies or do you think it will deter investment? Email your thoughts to or hit reply on this email. Also, have your say in our latest poll.

1. Brazilian truckers protest against Lula’s victory Truckers blocked highways at more than 300 points across Brazil yesterday to protest at leftist Luiz Inácio Lula da Silva’s victory in Sunday’s presidential election. The defeated hard-right president Jair Bolsonaro had still not conceded defeat or commented on the election result more than 24 hours after election officials confirmed the result. However, one of Bolsonaro’s ministers told the Reuters news agency that the president would address the nation later today.

2. Banks prepare to hold $12.7bn Twitter debt until 2023 The lenders that backed Elon Musk’s $44bn takeover of Twitter have conceded that they will be stuck holding the debt on their books for months, possibly incurring huge losses on the financing package, as they wait for the billionaire to unveil a clearer business plan. An early sign of that plan is a push into subscription revenues and charging for blue-tick verification. Meanwhile, former Twitter chief executive Jack Dorsey has rolled his entire stake — worth nearly $1bn — into the new company controlled by Musk.

3. Supreme Court scepticism of affirmative action in college admissions The US Supreme Court’s conservative majority yesterday expressed scepticism over universities’ authority to consider race as a factor in college admissions. In a marathon session lasting five hours, several conservative justices proposed an alternative, race-neutral admission system as they heard cases involving policies at the University of North Carolina, a public university, and Harvard University, the private Ivy League institution.

4. Trump Organization accused of ‘greed and cheating’ Manhattan prosecutors yesterday alleged two companies owned by Donald Trump engaged in “clear and straightforward” tax fraud as a criminal trial began in New York. The Trump Organization’s former chief financial officer, Allen Weisselberg, pleaded guilty to hiding $1.76mn from tax authorities in August. As part of his plea deal, he agreed to take the stand in the criminal case against his former employer. His testimony is expected next week.

5. Carlyle seeks $700mn over insurers’ failure to pay for jet seizures Carlyle Aviation Partners, one of the world’s biggest aircraft leasing operators, is seeking $700mn from more than 30 insurers and reinsurers after they failed to pay out over jet seizures by Russian airlines. The action, filed in Florida yesterday, includes a claim that the insurers, which include the US’s AIG, Axis and Chubb, have acted in bad faith on policies covering 23 aircraft following the war in Ukraine.

The day ahead

Federal Reserve meeting As the Fed convenes today for its latest interest-rate-setting meeting, inflation remains at the highest level in decades and is becoming more embedded, meaning policymakers are set to ratchet up their response and implement the fourth 0.75 percentage point increase in a row while also signalling more tightening ahead.

Economic data releases The Department of Labor will release new data on the number of job openings in the US, which are forecast to have fallen by 53,000 to 10mn in September. Data from the Institute of Supply Chain Management is expected to show that the US manufacturing sector contracted for the first time since May 2020. Separately, S&P Global will report manufacturing data for Brazil, Mexico and Canada.

Earnings Pfizer is expected to post a revenue decline when it reports third-quarter earnings as the uptake of its leading Covid-19 jab slows with growing public apathy towards the pandemic. Eli Lilly will join Pfizer in reporting before the opening bell. Investors will be on the lookout for more details about plans for the potential reunification of Fox and fellow Rupert-Murdoch owned News Corp, parent of the Wall Street Journal, under one company, when Fox Corp reports results. Ride-share company Uber, beer brewer Molson Coors, private equity firm KKR, and petrol refiner Marathon Petroleum also report before the market opens.

Biden hits the campaign trail Joe Biden will hit the campaign trail in Florida today as Democrats make a last-ditch attempt to win over voters with just one week to go until midterm elections. The latest polls suggest that with inflation and a looming recession weighing on voters’ minds, Republicans are on course to take back the House of Representatives, while control of the Senate will come down to a handful of hotly contested races. Sign-up to regular news on the campaign from Swamp Notes, which is free for the next two weeks.

Elections With his new alliance of far-right parties, Benjamin Netanyahu hopes to overcome a small deficit in polling to take a majority of the Knesset in today’s Israeli election and return as the nation’s prime minister. Danes also head to the polls today in a general election where the ruling Social Democrats are urging voters to look past their botched culling of minks at the height of the Covid-19 pandemic and trust them to lead the country through a deteriorating security situation and cost of living crisis.

What else we’re reading

The nuclear threats hanging over the world Broadly speaking, there are four main scenarios to consider: nuclear normalisation, nuclear blackmail, avoidance of war and Armageddon, writes Gideon Rachman. It is not hard to see how the use of a Russian nuclear weapon could spiral into an all-out nuclear war.

Germany struggles with China dependency If the war in Ukraine exposed the folly of Germany’s decades-long reliance on Russian gas, Berlin is about to pick up a bigger tab for its even deeper dependence on China. The country has long been one of the largest markets for German machinery, chemicals and cars. Some fear this presents a much greater threat to German security in the long term than does Russia.

Intricate supply chain makes hanging up hard to do Apple is also highly reliant on China. The disruption at the Foxconn manufacturing complex in Zhengzhou, known as “iPhone City”, comes just as the US company launches its iPhone 14 and ahead of the all-important holiday season. It could affect more than 10 per cent of global iPhone production capacity, according to one estimate. Apple is trying to reduce its reliance on the world’s second-largest economy but the reality is that it overwhelmingly depends on the country, says our Lex column.

Will Sisi take Egypt’s economy out of military hands? Egypt’s woes have underscored the vulnerability of poorer nations to geopolitical events after the war in Ukraine triggered capital flight from emerging markets. But economists and Egyptian businessmen say there are more fundamental issues at stake, arguing that the global crisis has magnified the fragility of President Abdel Fattah al-Sisi’s state-driven economic model.

A chart of current account balance as a % of GDP that shows Egypt's worsening current account deficit

The entrepreneurs who connect the spiritual and professional Melding faith and work is nothing new. Strong faith positions inspire a host of business ventures around the world, from providers of Islamic finance and Buddhist healthcare to purveyors of Kosher foods and Ayurvedic medicine as well as, of course, Christians. Yet the rise of the modern “profit for purpose” movement is inspiring a new generation of religious believers to connect the dots between their spiritual and professional lives.

Lunch with the FT

Jon Stewart was America’s pre-eminent satirist over 16 years of hosting The Daily Show. Then he disappeared before reappearing last year on Apple TV. The FT’s news editor Matthew Garrahan discusses his decision to quit “just as US politics veered into surreality” and his comeback.

© James Ferguson

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