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Fossil Fuels

The Big Oil Windfall Profits Tax Legislation Targets Price Gouging

“While Putin’s war is causing gas prices to go up, Big Oil companies are raking in record profits,” Senator Elizabeth Warren said. “We need to curb profiteering by Big Oil.. that starts with ensuring these corporations pay a price when they price gouge and using the revenue to help American families.”

For those of you who haven’t made the switch to all-electric personal transportation yet, we’re not here to lambaste you. We know you’re facing incrementally rising fuel costs at the gas pump and are churning enough without us in the sustainability world saying, “I told you so” (at least for this article). Instead, let’s review a bill proposed in the US Congress that is targeting windfall profits by Big Oil and is looking to provide relief to US drivers like you at the gas pump.

It’s time to ensure that these corporations pay a penalty when they price gouge. The legislative proposal seeks to amend the Internal Revenue Code of 1986 and impose a windfall profits excise tax on crude oil and to rebate the tax collected back to individual taxpayers. The Big Oil Windfall Profits Tax proposal makes transparent the profit-gorging of fossil fuel companies amid Russian President Vladimir Putin’s invasion of Ukraine.

“This is a bill to reduce gas prices and hold Big Oil accountable,” declared Representative Ro Khanna (D-CA), who’s leading the measure in the US House. In a press release, Khanna noted that the price of a gallon of gasoline is up well over a dollar from a year ago, and the price of a barrel of oil is double what it was before the pandemic.

“Russia’s invasion of Ukraine has further disrupted an already volatile global oil market by reducing supply and leading governments to limit imports of Russian energy to help protect the Ukrainian people,” Khanna says, adding that the Windfall Profits Tax can “reduce pressure on inflation by attacking corporate profiteering.”

AAA calculated the average US price at the gas pump today is $4.28.

The proposal is another measure, in addition to President Joe Biden’s ban on US imports of Russian fuels, to call out Big Oil, which has been leveraging the crisis in Ukraine to “pad their bottom line with war-fueled profits.”

The bill would require big oil companies, specifically those that produce or import at least 300,000 barrels of oil per day, to remit a per-barrel tax — whether the oil is domestically produced or imported — equal to 50% of the difference between the current price of a barrel of oil and the average price per barrel between 2015 and 2019.

The tax imposed on the energy firms would be quarterly. Consumers would receive quarterly rebates, with the relief phasing out for single filers earning more than $75,000 annually and joint filers earning more than $150,000 annually. The lawmakers project the tax to raise $45 billion per year at $120 per barrel of oil, delivering to single filers $240 annually and joint filers $360 annually.

The measure exempts smaller companies, which account for roughly 70% of the domestic production. This approach is meant to deter the larger multinational producers from simply raising prices.

Speaking Out Against Windfall Profits

With gas prices skyrocketing in recent days against a backdrop of continued Russian aggression in Eastern Europe, US Senator Sheldon Whitehouse (D-RI) has introduced the Big Oil Windfall Profits Tax to curb profiteering by oil companies and provide Americans relief at the gas pump. The Senate legislation is cosponsored by Senators Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Richard Blumenthal (D-CT), Tammy Baldwin (D-WI), Sherrod Brown (D-OH), Jack Reed (D-RI), Ed Markey (D-MA), Cory Booker (D-NJ), Michael Bennet (D-CO), and Bob Casey (D-PA). Congressman Ro Khanna (D-CA-17) introduced the legislation in the US House of Representatives.

Senator Whitehouse offered one of his creative YouTube tutorials to help US taxpayers to visualize the conscious decisions of the international oil cartel comprised of Russia, Saudi Arabi, and Iran and other countries to unreasonably elevate prices so they maximize profits.

Senator Elizabeth Warren noted that, while Putin’s war has caused gas prices to rise, “Big Oil companies are raking in record profits,” Warren said in a statement. “We need to curb profiteering by Big Oil and provide relief to Americans at the gas pump — that starts with ensuring these corporations pay a price when they price gouge, and using the revenue to help American families.”

“The oil and gas industry got the world into this mess by lobbying and lying to keep us hooked on fossil fuels. Now they’re using the war in Ukraine to distract us from the fact that they are ripping off hard working Americans with high gas prices as they reap record earnings” said Richard Wiles, president of the Center for Climate Integrity. “It’s time we stop allowing Big Oil to use its record profits, earned on the backs of hard working American families, to reward wealthy shareholders and CEOs, and instead make them pay a fair share to lower the cost for consumers.”

What’s Wrong with Big Oil?

In 2021 alone, Exxon Mobil, Shell, BP, and Chevron made a combined $75 billion in profits, and they haven’t stopped there.

Data released by Friends of the Earth and BailoutWatch shows that Big Oil CEOs have sold millions of dollars worth of shares, profiting a combined total of almost $99 million, in the weeks since President Biden said that he was certain Russia would invade Ukraine. Instead of using those profits to provide a stable supply of oil and gas or invest in climate solutions, Big Oil has spent a near record amount on billions of dollars worth of stock buybacks designed to enrich wealthy shareholders and their CEOs.

Forbes this week published a counterpoint article in which they censure legislative efforts to penalize Big Oil for their price gouging. Instead, Forbes states that the Biden administration needs to “take actions to help stimulate the domestic oil industry in the same myriad ways Biden and congressional Democrats have been trying to stimulate the wind, solar, and EV industries they hope to replace oil and gas.”

Really?

The article also had the audacity to suggest that Congress has failed to offer “any sort of rebate or subsidy proposal to compensate Big Oil companies for the catastrophic losses they suffered during 2020 and into 2021.”

The article concluded with a reprimand to Congressional leaders who seek windfall taxes as a response to corporate malfeasance that the efforts are little more than the “cynical brand of political opportunism they represent.”

Hmm. An interesting article recently published in the New York Times by two authors — both high level retired military — suggest energy independence for the US is not about pumping more oil and gas. It is about pushing the renewable energy and EV revolutions forward. Instead of promoting Big Oil, as did Forbes, they pinpoint a different concern on which the US should be focusing. Looking at the imminent cultural shift to EVs, they say “it will convert America’s current vulnerability to oil and gas markets to dependence on a supply chain for critical minerals for advanced batteries that is now controlled by and flows through China.”

The difference between the two editorials is striking: one is envisioning attempts to exist in a zero emissions future amidst global political unrest, and the other is speaking incestuously about individual profiteering. One forecasts danger from avoiding a necessity of the electrify everything transition, and the other, in essence, increases that danger by turning the proverbial blind eye.

The Big Oil Windfall Tax is a very small beginning place to make transparent, once and for all, the consummate greed of the fossil fuel industry.

 

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Written By

Carolyn Fortuna (they, them), Ph.D., is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavy Foundation. Carolyn is a small-time investor in Tesla. Please follow Carolyn on Twitter and Facebook.

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