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Now…on to today’s topic…
Senators Elizabeth Warren and Sheldon Whitehouse are making their priorities for our country clear: instead of assenting to continuous price hikes for everything, including the fuel that gets regular working Americans to and from their jobs, they are proposing to levy a tax on the extraordinary profits oil companies are raking in during a time of world crisis.
The tax would be imposed on the largest oil companies on a per barrel basis, and the money received would be returned to consumers each quarter. Senator Whitehouse “estimates that single filers would receive approximately $240 a year, and joint filers would get about $360..” Not a ton of money, but at least consumers would be repaid for some of the unplanned, out-of-pocket costs that are eating into the family budget.
This tax proposal is pretty straightforward but overlaps with another issue: Since we’ve cut off the importation of Russian oil, although it’s a fairly small percentage of our overall petroleum imports, ranging from 3% to 7%, our country has made and must keep its international commitments to cut the CO2 emissions that will stem climate change.
And the arguments are already starting: Do we permit more oil drilling in the United States, increasing risk of additional environmental degradation and reliance on fossil fuels, even for the short-term? Or does our country increase investments in renewable energy for a sustainable energy future, while buying petroleum from other countries for the near term and increasing someone else’s environmental degradation? A third alternative, or a strategy we can add to the other two is to cut back on driving and trade in those gas guzzling SUV’s for a hybrid or electric vehicle.
Here’s what Senator Markey had to say just a few days ago in his response to a proposal for more oil and gas drilling.
But wait, there are more complicating factors. This exhaustive article from The New York Times lays out the facts and analyzes the current conundrum of soaring gas prices, versus more drilling, versus oil companies refusing to drill so they can reap larger profits by keeping demand higher than supply.
“Even before the pandemic curbed demand for oil, U.S. producers had lowered production in an effort to pump up profits as investors demanded returns in the form of dividend payments and better financial performance.”
Ironically, the United States is for the most part, energy independent, and in fact, is the worlds largest oil producer since at least 2018. Why then, are gasoline prices getting so high that legislators are introducing a windfall profits tax? The one issue that the Times article did not address is why the major oil companies absolutely must pass on every penny of extra cost incurred to the consumer and blame it on alleged supply chain issues, and a myriad of other excuses.
When the world is facing a climate crisis, is this the time to increase our reliance on fossil fuels by increasing our supply of oil and/or importing more oil from around the world?
Let me know your thoughts in the Comments below.
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A Windfall Profits Tax