Progressives argue that Wall Street’s new prediction that the pain at the pump will worsen for US consumers this summer underscores the need for Congress to pass Democrats’ overwhelmingly popular bill to give Big Oil a windfall – to impose a profit tax.
“The public knows that oil and gas billionaires are to blame for the pain at the pump.”
According to analysts at Goldman Sachs, “Oil prices will rise to $140 a barrel this summer, with a fall in Russian production and a gradual recovery in Chinese demand adding to the pressure on already low supply.” insider reported Tuesday.
“But they said consumers will feel oil has hit $160 a barrel,” the news outlet continued, “because a lack of capacity at refineries is causing gasoline and fuel prices to rise more than usual.” expected, increasing costs across the economy.”
Oil prices are already up about 50% this year due to the Russian invasion of Ukraine and the mismatch between supply and demand. On Tuesday, Brent crude, the international benchmark, and WTI crude, the US benchmark, traded at around $119 and $118 a barrel, respectively, while the nationwide average price of a gallon of gas rose $4.92.
Ever since consumer demand returned after a brief pandemic-related dip in 2020, investors have pressured the oil giants to squelch production to drive up prices. Last year, as average gas prices in the U.S. rose steadily, reaching about $3.40 a gallon in December 2021, up from $2.10 a year earlier, 25 of the world’s largest fossil fuel companies posted record profits of $205 billion.
Oil and gas companies have hiked prices even more in 2022 — especially after President Joe Biden’s announcement in early March of a US ban on imports of fossil fuels from Russia. Allegations by war profiteers have increased since April’s oil executives announced their “best quarter ever.”
A report released last month by watchdog group Accountable.US found that “21 oil and gas companies made more than $41 billion in earnings in the first three months of the year, more than double what they were before a year ago an average of $1.2 billion more per company than at the same time last year thanks to what the companies themselves say is high oil prices and the crisis in Ukraine.”
Chevron and ExxonMobil made $6.3 billion and $5.5 billion, respectively, in the first quarter of this year, meaning they quadrupled and doubled their earnings year-over-year even as the US economy shrank.
“We need a windfall profit tax on Big Oil,” Robert Reich, a professor of public policy at the University of California, Berkeley, tweeted Tuesday.
Petroleum executives have come under increased scrutiny from Democratic congressmen and the New York Attorney General in recent weeks, but Jamie Henn, a spokesman for the Stop the Oil Profiteering (STOP) campaign, has long argued that “the clearest and The most popular way to get direct public relief and control Big Oil’s rampant wartime profits is with a windfall profits tax.
In March, Congressional Democrats led by Rep. Ro Khanna (California) and Sen. Sheldon Whitehouse (RI) introduced the bicameral Big Oil Windfall Profits Tax to crack down on what progressive lawmakers call “shameless” price gouging have condemned fossil fuel companies.
According to polling data released just days after the law was unveiled, a whopping 80% of US voters — including 73% of Republicans — support the measure, which would hit big fossil-fuel companies with a 50% per-barrel tax difference between the current price of a barrel of oil and the average price per barrel between 2015 and 2019. An estimated $45 billion in annual revenue would be redistributed to US households in the form of quarterly rebates.
“There’s a lot of bipartisan support for this policy,” Henn said in late April, “because the public knows oil and gas billionaires are to blame for the pain at the pump.”
Despite being brought to Capitol Hill to testify before Congress about their role in raising gas prices, US fossil fuel executives, who are expected to make as much as $126 billion in additional profits this year, have done so not been shy about how they are capitalizing on the war in Ukraine.
After rewarding themselves and other shareholders with billions of dollars worth of share buybacks and dividend increases over the past year, industry leaders are on track to do more of the same in 2022.
To put an end to this behavior, dozens of progressive interest groups have called on Senate Majority Leader Chuck Schumer (DN.Y.) and House Speaker Nancy Pelosi (D-Calif.) to pass the Big Oil Windfall Profits Tax Support that Sen. Elizabeth Warren (D-Mass.) has said she can help Democrats avert “big losses” in the crucial November midterm election.
For its part, the STOP campaign tweeted Monday that a windfall tax on Big Oil’s skyrocketing profits is an “easy” solution to high gas prices.
Khanna highlighted recently reporting that the Biden White House is in “talks with” congressional lawmakers about shaping a potential windfall profits tax.
“This tax would help curb Big Oil’s greed for profit and put the money straight into the pockets of consumers,” Khanna said said Monday on social media.
Last month the British Conservative Government announced that the UK will levy a 25% windfall tax on oil and gas profits, expected to raise $19 billion, to support low-income households struggling with significant increases in the cost of living.
“If the British Conservatives can do it”, Reich said Montag, “Biden can do that too.”
However, Khanna and Whitehouse’s proposal faces great odds in the Senate, where the anti-Democratic filibuster rule requires 60 votes to drive debate on most legislation. Not only is the support of at least 10 Republicans unlikely to materialize, it is Questions Stay tuned on whether corporate Democratic Sen. Joe Manchin (W.Va.) would support the bill.
“The President is asking Congress and others for possible ideas,” said Secretary of Commerce Gina Raimondo said Tuesday. “But the reality is there isn’t much more to do… The President has already taken very bold steps.”
Henn, meanwhile, has argued that Biden’s moves to release millions of barrels of oil from the country’s strategic reserves and suspend seasonal ethanol blending regulations will not stop “Big Oil’s coordinated campaign to exploit Americans.”