Summers: Biden Should Kill Talk of Windfall Profits Tax ‘as the Single Most Important Thing He Can Do to Incentivize Oil Companies’

During a portion of an interview with Bloomberg on Friday, economist, Harvard Professor, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said that President Joe Biden “should stop all talk of windfall profits taxes as the single most important thing he can do to incentivize oil companies.”

Summers stated, “I think the president should stop all talk of windfall profits taxes as the single most important thing he can do to incentivize oil companies. I think the use of the Strategic Petroleum Reserve is a good idea, but I would favor doing it in a slightly different way. The government can lock in a profit. What the government should do is sell all this oil and should commit to a buyback of oil, using the forward market at the substantial discount that’s available. So, the government can sell oil for above $100 and promise to buy that oil back…in the range of $90, and then, a year from now, we’ll have the same sized Strategic Petroleum Reserve we had before, and we’ll have $10 a barrel times, say, 100 million barrels of oil, which is $1 billion. And I think more generally, we need to take a modern approach, a modern financial approach to these strategic reserves in which we think about using the futures markets and locking in profits at the same time we’re achieving stabilization.”

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