Oil Company Profits Have Surged. It’s Time to Tax the Windfall.
Amid Russia’s invasion of Ukraine, a chorus of voices is trying to convince ordinary consumers that paying higher gas prices is some kind of patriotic act. Big Oil doesn’t need the extra profits — it needs to have those profits taxed away.
Amid Russia’s invasion of Ukraine, gas prices across America have reached a fourteen-year high. The spike has been so sudden, in fact, that the cost per gallon spiked by a full cent every day throughout the last week of February. And even before the invasion and corresponding discussions throughout Western countries about banning Russian oil imports consumers were already being gouged at the pumps — oil companies raking in profits approaching $200 billion at the end of 2021.
It may be a catastrophe for those fueling up but, throughout North America, an industry already basking in its own largesse clearly senses an opportunity. The American Petroleum Institute, for example, has seized on the moment to yet again promote the Keystone XL pipeline and advocate for new drilling. The editorial board at Canada’s newspaper of record, meanwhile, is attempting to revive a version of the “ethical oil” case popularized by far-right pundit Ezra Levant, viewing the current situation as an occasion for the country’s oil industry to reassert itself, with some pundits and right-wing politicians following suit. Perhaps best summing up this absurd zeitgeist, one op-ed published by Bloomberg simply declared “Fracking Is a Powerful Weapon Against Russia.”
In a development that’s nothing short of perverse, there are also signs higher gas prices will be pitched to consumers as some kind of patriotic wartime gesture. This “patriotism at the pumps” has the potential to serve a deeply unpopular industry well even as it raises prices, but could also be useful to governing Democrats as political cover. Sure, people might be getting gouged by highly profitable corporations but (or so the argument goes) paying more helps strike a blow against tyranny. Outside the actual oil lobby, something like this line has already been taken up by well-off liberal entertainers like Stephen Colbert and George Takei and we shouldn’t be surprised to see some version of it get louder, particularly if costs continue to spike.
It’s appalling that this even needs to be said, but there is nothing patriotic or freedom-promoting about corporate price gouging — particularly when it comes to a dirty commodity that desperately needs to be phased out. Should such a framing gain steam, it will represent nothing more than a PR coup for an already profitable industry and a disaster for ordinary consumers. There are, of course, some obvious answers here that involve accelerating the transition away from fossil fuels and toward renewable energy.
More immediately, though, there’s a strong case for controlling prices and imposing a windfall tax on corporate profits along lines proposed by Bernie Sanders, Ro Khanna, and Elizabeth Warren. Among other things, such a tax could generate revenue for green public investment and might also dissuade companies from artificially jacking up their prices, helping to protect ordinary consumers in the process. It would hardly be an unpopular idea, and could effectively socialize industry profits instead of allowing them to accrue to owners and shareholders taking advantage of a war. As Truthout’s Sharon Zhang has noted, the windfall tax Sanders proposed on billionaire pandemic profits back in 2020 might have raised trillions had it been implemented.
Given all of the variables involved in a fluctuating and highly unpredictable situation like Russia’s invasion, it’s difficult to know how long the current spike in gas prices will hold or how much sharper it may ultimately become. What’s all too clear, however, is that an industry complicit in the ongoing destruction of the planet is seizing on a deadly conflict to promote the idea that higher prices are both inevitable and even patriotic. Taxing their profits to the hilt is thus a bare minimum political demand.