Big Oil Earns Billions Despite High Oil Prices
Washington Democrats support a windfall tax on profits. They argue that it is the fairest way to help those who cannot afford heat or drive.
Senator Elizabeth Warren, one co-sponsor of the Senate measure, stated that “we need to curb profiteering from Big Oil and provide relief for Americans at the pump — that starts by ensuring these corporations pay a price when they price gouge.”
The UK’s opposition Labour Party calls for an increase in taxes on North Sea oil and natural gas companies’ profits for one year. This will help to pay for various financial relief measures. The US bill would tax profits Big Oil companies make from crude oil prices that are higher than historical levels. It would pay hundreds to taxpayers of low and middle income each year.
However, this assumes that oil prices average $120 per barrel. Prices surged above that level two weeks back. Although prices have declined since then, it shows the difficulty of creating legislation to regulate a volatile commodity market. Brent oil closed Friday just below $108. Brent oil closed Friday at just under $108.
The US bill taxes profits that oil companies make on crude prices higher than historical levels. However, this assumes an average oil price of $120 per barrel. Two weeks ago, prices soared above that level but have since fallen back.
However, the Biden administration has not yet voiced support for the windfall tax proposal and the Senate does not have enough votes to pass it. Greg Valliere is chief US policy strategist at AGF Investments.
Both trade groups representing the British and American oil industries claim that the windfall profit tax proposal would be against calls for increased domestic production in these countries to make up for the loss from Russian crude oil.
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