Time For A Windfall Profits Tax On Gas And Oil

Alan Grayson is running for his old seat in Orlando. Since he was, arguably, the best member of Congress when he was a member, there’s no reason to think he won’t be right up there again this time. And since much of his campaign seems devoted to taking on inflation and the injustice around inflation, yesterday I asked him about the NY Times report on Exxon’s and Chevron’s sky-high profits. “Republicans and conservative Democrats,” he told me, “are putting out an economically illiterate argument that inflation is just the result of higher costs of doing business, notably wages. That math doesn’t add up, because inflation is rising faster that wages. What’s actually happening is that corporate profits are soaring, as corporations find that they can raise their prices without cutting sales or market share. There is absolutely no reason I can think of why those windfall profits should not be taxed, to the bone. Note that the same corporations that demanded government handouts when their profits disappeared during the pandemic now think that their windfall profits are all theirs, and theirs alone. It’s the same game, over and over again: heads, they win; tails we lose.”

Last week, Isabella Simonetti wrote that “Exxon Mobil and Chevron, the two largest energy companies in the United States, said on Friday that profits rose to record levels in the second quarter as they continued to reap the benefits of soaring oil and gas prices. Exxon reported income of $17.9 billion for the three months through June, more than three times what it earned in the same quarter a year ago… Chevron’s performance was similar, with profit more than tripling.”

Simonetti didn’t report any talk of windfall profits taxes-- must've forgotten-- just expanding production to lower costs to consumers. Yesterday, however, Andy Rowell reported on growing calls for taxes on windfall profits for OilChangeInternational. “The amounts are obscene,” he wrote. “They are mind-boggling. This is profit-making like you have never seen it before. It is also profiteering from war and price gouging at our expense. Big Oil is making billions off the misery of millions… This is blood money. This is crude capitalism at its worst."

These profits are made at the expense of ordinary working men and women. Tens of millions of people are suffering from a cost of living crisis with inflation roaring fueled by the war in Ukraine.

In both the U.S. and U.K., there is an unprecedented demand for food banks as people go hungry. One in six adults in the U.S. are now reliant on food banks. And one survey earlier this year reported that black and Hispanic/Latinx adults were almost three times more likely than white adults to report accessing charitable food.

In the U.K., meanwhile, over one in eight people say their family budgets are so stretched already that they will not be able to cope with further energy bill hikes, which will come into effect in the Autumn.

And not only are the companies making obscene amounts of money, but they are not even investing these profits in renewables.

Last week, I pointed out that Shell was implementing a multi-billion buy back of shares, rather than doubling up its renewables investment. ExxonKnew points out “Exxon’s $17.9 billion in profits for just three months in 2022 are more than all the low-carbon investments the company has pledged to make through 2027, combined.”

It is hardly surprising therefore that there are increasing calls for a windfall tax on Big Oil from U.S politicians:

With half a dozen clownish Republicans competing in today’s WA-02 jungle primary, Jason Call seems like a lock for a spot in the general election. He deserves it, for what he stands for and for how hard he works. He read that Times piece too and told me that the paper “has played its part for the war machine over the years. They are only peripherally tying the energy inflation to the war machine here, but at least they are objectively identifying the price gouging that we all know is taking place. With little to no government intervention in the energy market (indeed with our government and the EU once again fighting a war for energy resources) and with our representatives so deeply connected to fossil fuel and war machine funding (WA-02 incumbent Rick Larsen being one of the most deeply so), we can only wonder when something will drastically change to demand an end to both war and fossil fuels. The climate emergency is upon us, and we have to keep fighting against these systems that will inevitably kill us. Remember that these companies literally denied climate science for decades. We must use this moment to transform, but we won’t without radically different thinking. After we get through today’s primary, we’re going to be working hard to present that vision for a better future.”

You can contribute to Jason Call and to Alan Grayson right here. Let’s help make America better instead of just worrying about how bad it’s getting.