U.S. Senator Introduces Big Oil Windfall Profits Tax

U.S. Senator Introduces Big Oil Windfall Profits Tax
With gas prices skyrocketing over the Russia-Ukraine conflict, Senator Whitehouse has introduced the Big Oil Windfall Profits Tax to provide relief for Americans at the gas pump.

With gas prices skyrocketing due to the Russian aggression in Ukraine, U.S. Senator Sheldon Whitehouse has introduced the Big Oil Windfall Profits Tax to curb profiteering by oil companies and provide relief for Americans at the gas pump.

Apart from Whitehouse, the Senate legislation is also cosponsored by Senators Jeff Merkley, Elizabeth Warren, Bernie Sanders, Richard Blumenthal, Tammy Baldwin, Sherrod Brown, Jack Reed, Ed Markey, Cory Booker, Michael Bennet, and Bob Casey.

According to a statement from Senator Whitehouse’s office, Congressman Ro Khanna will introduce the legislation in the U.S. House of Representatives.

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.

At the same time, big oil companies are reaping near-record profits. In 2021, ExxonMobil’s profits jumped over 60 percent over pre-pandemic levels to more than $23 billion. The statement also said that, over that same period, the price of a gallon of gasoline rose from an average of $2.69 to $3.41. It currently stands at over $4. This increase is not justified by increases in the cost of domestic production but is driven by international markets controlled by fossil fuel cartels.

The Big Oil Windfall Profits Tax would provide consumers guaranteed relief while maintaining American competitiveness and reducing pressure on inflation by attacking corporate profiteering, Whitehouse’s statement explained.

Under the bill, large oil companies that produce or import at least 300,000 barrels of oil per day – or did so in 2019 – will owe a per-barrel tax equal to 50 percent of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019, a period when big oil companies were already earning large profits. The quarterly tax will apply to both domestically produced and imported barrels of oil to ensure a level playing field. Smaller companies accounting for roughly 70 percent of the domestic production will be exempt.

Revenue raised from the windfall profits of big oil companies will be returned to consumers in the form of a quarterly rebate, which would phase out for single filers who earn more than $75,000 in annual income and joint filers who earn more than $150,000.

“While the U.S. severs economic ties with Putin to protect our national security, I am committed to doing everything in my power to limit the fallout for Rhode Islanders who were already getting squeezed before this happened,” said Whitehouse. “We’ve seen this script before, and we cannot allow the fossil fuel industry to collect a massive windfall once again by taking advantage of an international crisis. I propose sending Big Oil’s big windfall back to the hardworking people who paid for it at the gas pump. Over the longer term, speeding up the transition to renewables will lower energy costs, insulate consumers from price spikes, and reduce Western nations’ dependence on foreign despots and greedy fossil fuel companies.

“We have to cut off the Russian oil sales that are funding Putin’s war crimes in Ukraine. Americans want to put pressure on Putin, but they need help with high gas prices. So, let’s tax oil companies’ war profiteering and send gasoline rebate checks to Americans,” Merkley added.

“While Putin’s war is causing gas prices to go up, Big Oil companies are raking in record profits,” Warren claimed. “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.”

At $120 per barrel of oil, the levy would raise approximately $45 billion per year. At that price, single filers would receive approximately $240 each year and joint filers would receive roughly $360 each year.

“The federal government doesn’t control the price of oil, but we can and should ensure that instead of funneling record cash back to big oil, this targeted, temporary windfall tax would deliver real relief at the gas pump. This bill will help working families, strengthen our economy, and still allow oil companies to profit without exploiting the American people,” Reed said.

“This is a bill to reduce gas prices and hold Big Oil accountable. These companies have made billions and used the profits to enrich their shareholders while average Americans are hurting at the pump,” Khanna stated. “I’m glad to introduce this legislation with Senator Whitehouse that will provide an incentive to cap gas prices and put money back in the pockets of consumers.”

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