Biden said Wednesday, addressing oil company executives: “You’re sitting on record profits and we’re giving you more certainty, so you can act now to increase oil production now. … You should not be using your profits to buy back stock or for dividends — not now.”

WILLIAM LAZONICK, william.lazonick@gmail.com
Lazonick is a professor emeritus of economics at the University of Massachusetts. Earlier this year, he wrote the piece “Where Did You Go, Vice President Joe?” for the Institute for New Economic Thinking. The piece contrasts Biden’s prior rhetoric on policies on stopping stock buybacks with his inaction as president.

Lazonick said today: “In announcing the plan to release 15 million barrels of oil from the strategic reserve to bring down prices, President Biden commented that the major oil companies should use their profits to increase domestic production, not to distribute cash to shareholders in the form of buybacks and dividends. The oil companies have a long history of doing buybacks in addition to dividends to boost their stock prices while Americans are burdened with high oil prices. For example, in 2005-2015 Exxon Mobil distributed $224 billion in buybacks on top of $101 billion in dividends (a combined 86 percent of net income). As Vice President, Biden was an outspoken critic of stock buybacks, and he should know that an executive order that bans buybacks is the only way in which the oil companies will cease using the profits from high oil prices to pump up their stock prices. Decisive policy, not deferential pleading, is what we need now.”

Lazonick is president of the Academic-Industry Research Network and has written several papers for the Institute for New Economic Thinking.

He is co-author of Predatory Value Extraction: How the Looting of the Business Corporation Became the U.S. Norm and How Sustainable Prosperity Can Be Restored (Oxford University Press, 2020).