U.S. Senators Alex Padilla (D-Calif.) and Sheldon Whitehouse (D-R.I.) reintroduced legislation to crack down on Big Oil taking advantage of Americans at the gas pump and provide relief to consumers. The Big Oil Windfall Profits Tax Act would require large oil companies that produce or import at least 300,000 barrels of oil per day to pay a per-barrel tax equal to 50 percent of the difference between the current price of a barrel of oil and the average price per barrel between 2015-2019, a period when big oil companies were already earning large profits. The legislation is sponsored by Congressman Ro Khanna (D-Calif.) in the House of Representatives.
This would return Big Oil’s excessive profits back to the American people following a year of record profits for the five largest oil and gas companies in 2022. Exxon Mobil, Chevron, BP, Shell, and TotalEnergies hauled in pre-tax profits totaling $264.3 billion in fiscal year 2022. Exxon alone reported $77.8 billion in profits in 2022, smashing the earnings record of any American or European oil company. Exxon also announced plans to keep oil production flat for the year ahead. Rival oil giant Chevron – flush with $49.7 billion in profits – greenlit $75 billion in stock buybacks in 2023 to benefit its wealthy executives and shareholders on Wall Street.
“While the price of oil is decreasing, Big Oil continues to line its pockets at the expense of Californians, who are paying the price at the pump—that is wholly unacceptable,” said Senator Padilla. “Last year, gas prices in California reached upwards of $5.75 per gallon, squeezing hardworking families. The Big Oil Windfall Profits Tax Act would hold Big Oil companies accountable and deliver much-needed relief to the American people.”
“Big Oil’s obscene profits last year are the spoils of war and cartel pricing. Clawing back Big Oil’s windfall and returning it to the American families who paid for it at the pump is good policy that will help deter future price gouging,” said Senator Whitehouse, Chairman of the Senate Budget Committee and a senior member of Senate Environment and Public Works Committee. “Congress should heed the President’s call, ignore the fossil fuel industry’s lies, and deliver this needed relief for the American people.”
The Big Oil Windfall Profits Tax Act would:
- Claw back Big Oil’s windfall profits. Large oil companies will owe a per-barrel quarterly tax equal to 50 percent of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019. It will apply to both domestically produced and imported barrels of oil to ensure a level playing field. The claw back will apply to oil profits in 2022 and going forward so that Americans gouged by high prices are made whole.
- Apply only to the largest companies. Large companies that produce or import at least 300,000 barrels of oil per day will be subject to the legislation. Smaller companies accounting for roughly 70 percent of domestic production will be exempt, so oil giants like Exxon and Chevron cannot simply gouge consumers further without the threat of losing market share.
- Lower consumer costs with relief rebates. Revenue raised from the windfall profits of big oil companies will 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. With oil priced at roughly $90-100 per barrel, this levy would raise approximately $48.1 billion per year. At this price, single filers would receive an estimated $255 each year and joint filers $382.
In addition to Padilla and Whitehouse, the legislation is cosponsored in the Senate by Senators Jeff Merkley (D-Ore.), Sherrod Brown (D-Ohio), Bob Casey (D-Penn.), Elizabeth Warren (D-Mass.), Edward Markey (D-Mass.), Richard Blumenthal (D-Conn.), Michael Bennet (D-Colo.), Chris Murphy (D-Conn.), Tim Kaine (D-Va.), Raphael Warnock (D-Ga.), Tammy Baldwin (D-Wis.), Cory Booker (D-N.J.), Debbie Stabenow (D-Mich,), Bernie Sanders (I-Vt.), and Jack Reed (D-R.I.).
Full text of the bill is available here.