Big Oil Windfall Profits Tax Would Send Direct Rebate to Consumers When Oil Companies Take Advantage of World Events to Jack Up Prices
WASHINGTON, D.C. – March 10, 2022 – With gas prices skyrocketing in recent days against a backdrop of continued Russian aggression in Eastern Europe, U.S. Senators Sherrod Brown (D-OH) and Sheldon Whitehouse (D-RI) introduced the Big Oil Windfall Profits Tax to send a direct rebate to consumers to provide Americans relief at the gas pump, and crack down on oil companies that jack up prices to pad their own profits. 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), 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) will introduce the legislation in the U.S. House of Representatives.
“Big oil companies are making near-record profits, while Ohioans pay more than ever for gas,” said Brown. “This bill will crack down on Big Oil price gouging, and guarantee that consumers in Ohio and across the country get money directly back in their pockets if Big Oil continues to rake in record profits.”
While Americans suffer at the gas pump, 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. Over that same time 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. 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.
The Big Oil Windfall Profits Tax would provide consumers guaranteed relief while maintaining American competitiveness and reducing pressure on inflation by attacking corporate profiteering. Under Brown’s and Whitehouse’s bill, revenue raised from the windfall profits of big oil companies will be returned to consumers in the form of a quarterly rebate. Americans who received stimulus checks would be eligible for rebates, 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. 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.
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, so oil giants like Exxon Mobil and Chevron cannot simply gouge consumers further without the threat of losing market share.