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Opinion: The best solution to high gas prices: tax the oil companies

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Gas prices rose practically 70 cents per gallon in a two-week interval within the wake of the invasion. Prices on the pump have since plateaued, however they’re nonetheless greater than $4 per gallon. Biden has responded by asserting the discharge of oil from the nation’s Strategic Petroleum Reserve to extend provide and decrease costs. The transfer, together with efforts from US allies abroad, will add multiple million barrels of oil per day to provide. Nonetheless, the president and Congress ought to go additional in combating worth will increase. A method to try this is by enacting a short lived windfall profits tax on Large Oil and the billions of {dollars} the trade has been raking in.
Oil giants Shell, BP, ExxonMobil and Chevron reported greater than $75 billion in profits final yr. ExxonMobil alone made $8.9 billion within the closing three months of 2021. That is within the wake of propping up Putin’s fossil fuel economy for years. ExxonMobil’s subsidiary, Exxon Neftegas Limited, has a stake in an oil and fuel undertaking that has generated billions in funds to Russia’s federal and regional governments. BP, in the meantime, has owned one-fifth of Rosneft, the Russian state-owned oil firm, since 2013, although it has mentioned it will divest its stake. Shell has a stake in an oil and fuel undertaking that Russian vitality firm Gazprom controls, whereas Chevron owns a stake in a pipeline enterprise there.
These firms are ready to revenue from Russia’s assault on Ukraine. Pumping oil prices them the identical quantity, however now they will promote it at costs pushed up by the warfare. They’re utilizing the ensuing windfall earnings to extend payouts to shareholders by buybacks and dividends. When challenged throughout a congressional listening to final week, oil CEOs made it clear they aren’t going to rein themselves in.
That is why Congress should implement a short lived windfall earnings tax which, based on a brand new report from the Center for American Progress (CAP), may usher in tens of billions of {dollars} to assist defray gasoline prices for households. The tax would rise or fall as costs fluctuate, till costs return to pre-crisis ranges.
At present, oil companies earn more cash when the costs they will cost rise. But when the tax price of oil firms went up together with the value of oil, the windfall could be recaptured and will then be returned to American customers by way of a direct payment, as an example.

This proposal could be a short lived response to a rare worldwide vitality disaster. Congress may be certain that the windfall earnings tax would go away as soon as oil costs return to regular ranges ($75 per barrel of oil, based on the CAP evaluation). However this may not be the final time that the US shopper is buffeted by risky vitality prices, particularly if we stay so depending on petroleum. For the long term, Congress should additionally spend money on constructing a clear vitality financial system.

It is time to make oil firms pay their fair proportion and alleviate a few of the burden on the American shopper. Probably the most quick motion Congress ought to take is to enact a short lived windfall earnings tax that ensures oil firms do not siphon away earnings for themselves on the expense of American households.