WASHINGTON — Citing rising retail fuel prices against a backdrop of Russia’s war on Ukraine, U.S. Sen. Sheldon Whitehouse (D-R.I.) has introduced the Big Oil Windfall Profits Tax, which he said is intended to curb alleged profiteering by oil companies and provide Americans relief at the gas pump.
Democratic Sens. Jeff Merkley (Ore.), Elizabeth Warren (Mass.), Richard Blumenthal (Conn.), Tammy Baldwin (Wis.), Sherrod Brown (Ohio), Jack Reed (R.I.), Ed Markey (Mass.), Cory Booker (N.J.), Michael Bennet (Colo.) and Bob Casey (Pa.), along with Bernie Sanders (I-Vt.), cosponsored the legislation. Congressman Ro Khanna (D-Calif.) will introduce the legislation in the U.S. House of Representatives.
The senators acknowledge Putin’s responsibility for the war and its direct and indirect effects, but they are also using the legislation to go after “greedy” oil companies for what they call excessive profits, price gouging and war profiteering and to accelerate the move to cleaner energy.
“While the U.S. severs economic ties with Putin to protect our national security, I am committed to doing everything in my power to limit the fallout for Rhode Islanders who were already getting squeezed before this happened,” said Whitehouse. “We’ve seen this script before, and we cannot allow the fossil fuel industry to once again collect a massive windfall by taking advantage of an international crisis. I propose sending Big Oil’s big windfall back to the hardworking people who paid for it at the gas pump. Over the longer term, speeding up the transition to renewables will lower energy costs, insulate consumers from price spikes and reduce Western nations’ dependence on foreign despots and greedy fossil fuel companies.”
“We have to cut off the Russian oil sales that are funding Putin’s war crimes in Ukraine. Americans want to put pressure on Putin, but they need help with high gas prices. So let’s tax oil companies’ war profiteering and send gasoline rebate checks to Americans,” said Merkley.
Click here to read other senators’ comments about the legislation.
Whitehouse also said increases in retail gasoline prices are not justified by increases in the cost of domestic production, but are “driven by international markets controlled by fossil fuel cartels.”
The Big Oil Windfall Profits Tax would provide consumers guaranteed relief while maintaining American competitiveness and reducing pressure on inflation by attacking corporate profiteering, he said. Under Whitehouse’s bill, large oil companies that produce or import at least 300,000 barrels of oil per day (or did so in 2019) would owe a per-barrel tax equal to 50% 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 would apply to both domestically produced and imported barrels of oil to ensure a level playing field, he said.
Smaller companies accounting for approximately 70% of the domestic production would be exempt, Whitehouse said, “so oil giants like Exxon Mobil and Chevron cannot simply gouge consumers further without the threat of losing market share.”
Revenue raised from the windfall profits of big oil companies would be returned to consumers in the form of a quarterly rebate, 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, he said. 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 approximately $360 each year, said Whitehouse.
Meanwhile, state attorneys general around the country are beginning to issue a new round of warnings about gasoline price gouging. New York Attorney General Letitia James, for example, warned oil companies and gas stations that price gouging is illegal and reminded New Yorkers to be on alert for potential price gouging of fuel.
“New Yorkers should prepare for continued market disruptions, potentially inflated prices at the pump, and ensure that they know their rights,” she said. “New York law prohibits sellers of fuel and other vital and necessary goods from charging unconscionably excessive prices during an abnormal market disruption, including disruptions caused by world conflicts.”
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