Oil and gas companies are raking it in as fossil prices rocketed over the last few weeks. High prices mean high profits. But not just high profits, “record profits.” Exxon Mobil made $23 billion in profit for 2021; Chevron also experienced its most profitable year since 2014, with $15.6 billion in revenue for 2021; BP reported it made $12.85 billion in 2021; Shell made $19.29 billion last year. This year, big oil company profits are expected to rise by as much as 50% as compared with last year.
And what are these companies doing with these profits and surplus revenue? They are handing it over to Wall Street, with a reported average of $40.3 billion per company on stock buybacks and dividends.
Well, these absurdities – where average people are struggling to pay increasing electricity, heating and transportation costs while fossil fuel company investors and CEOs are swimming in pools of gold coins – has not gone unnoticed by governments. The European Union, the US Senate, and the United Kingdom are all talking about taxing energy companies’ “windfall profits” to fund renewable energy investments and to help people afford daily life.
The idea of a ‘windfall tax’ is that governments would tax some percentage (50% in the US example) of the difference between the current price of a barrel of oil and an average price (in the US example, from the years 2015 to 2019, a period in which energy companies were recording large profits).
In a communication to The European Parliament, the European Commission proposed “Member States can consider temporary tax measures on windfall profits and exceptionally decide to capture a part of these returns for redistribution to consumers.”
Windfall taxes would be a big step in the right direction. Fossil fuel companies knowingly produced the climate crisis driving hundred billion dollar climate related disasters each year. The world is struggling due to precarious and volatile oil, gas, and coal prices which affect daily costs, especially for the working class. Fossil fuels also enable those who would wage war by allowing them to rake in profits.
That is why the climate movement is calling on governments around the globe to charge fossil fuel companies for the climate destruction they caused. Given the massive challenge of the climate crisis, the windfall profits tax isn’t the only thing we need, not by a long shot. However, right now, it would help a lot.
It’s not right that fossil fuel companies are benefiting from this crisis while everyone else struggles. It would also be a step towards lessening our dependence on those who would wage war with our money, and free up resources for the transition that we need. The answer is clear, governments around the world need to enact a Windfall Profits Tax now.