Democrats are trying to revive a Carter-era redistribution tax targeting oil producers.
Democratic Rhode Island Sen. Sheldon Whitehouse and Democratic California Rep. Ro Khanna reintroduced the Big Oil Windfall Profits Tax Act, according to a March press release. The bill aims to place a 50% tax on the difference between the current year’s price per barrel of oil with the previous year’s, focusing on companies that produce at least 300,000 barrels annually.
Whitehouse’s and Khanna’s offices did not respond to the Daily Caller News Foundation’s requests for comment.
“I’m proud to reintroduce the Big Oil Windfall Profits Tax Act alongside Senator Whitehouse to stop Big Oil from profiteering off of foreign wars at Americans’ expense and deliver real relief at the pump,” Khanna stated in the press release.
The tax redistributes $33 billion in revenue toward single-filers who earn up to $75,000 annually, according to the press release. The income limit for joint filers is twice this amount.
President Jimmy Carter tried a similar tax in 1980 following an oil crisis sparked by the 1979 Iranian Revolution. The Crude Oil Windfall Profit Tax Act of 1980 aimed to tax oil barrel profits by 30-70% depending on which of three tiers the oil producer fell under.
Congress repealed the tax in 1988 after it made the U.S. less energy independent by decreasing domestic oil production while increasing oil imports.
“American consumers are once again getting squeezed at the gas pump as President Trump’s war of choice in Iran sends gas prices soaring and money flowing to his Big Oil donors,” Whitehouse stated. “We should send any big windfall for Big Oil back to the hardworking people who paid for it at the gas pump. Over the longer term, accelerating our transition to clean energy will lower energy costs, insulate consumers from these kinds of price spikes, and reduce America’s dependence on foreign despots and greedy fossil fuel companies.”
Weeks after the Iran War started in February, gas prices rose 80 cents per gallon on average, the bill’s one-pager claims. It also claims Qatar warned oil prices could reach $150 per barrel in coming weeks – well above the Biden administration’s March 2022 high of $139.
Oil prices returned to pre-Iran War levels, The New York Times reported Friday.
The March one-pager then blames oil producers for the high gas prices that followed the Biden administration’s 2022 interventions in the Russo-Ukrainian war and handling of the COVID-19 pandemic, noting that ExxonMobil doubled its profits that year.
Energy policy consultant David Blackmon told the DCNF that the bill should be “no surprise given the current socialist surge happening within the Democrat party.”
“My first job in the industry when I came out of university with an accounting degree in 1979 was to become an expert on Jimmy Carter’s original WPT,” Blackmon said. “Carter’s tax was an absurd law which basically amounted to a kind of Rube Golberg [sic] scheme applied to the oil industry. It punished royalty owners and small producers far more than the “Big Oil” companies, and was so stupidly designed that it was repealed by a Democrat-dominated congress in 1987 because it had produced zero government revenue for three straight years.”
Blackmon told the DCNF that the “anti-energy, anti-national security” bill would punish the U.S. domestic oil and gas industry, which he said “greatly enhanc[ed] U.S. national security and energy dominance by adding the equivalent of Saudi Arabia’s daily output to America’s portfolio.”
“[Khanna’s bill] amounts to nothing more than a cynical effort by leftwing politicians to gain favor with the Democrat party’s increasingly socialist voting base by punishing one of their party’s favorite political bogeymen,” Blackmon said. “Like Carter’s absurd scheme, if passed it would quickly be revealed as a legislative fraud as the revenues collected under it are wasted by congress and the federal debt continues to grow. Other than that, I suppose it’s just awesome.”
American Petroleum Institute (API) also opposes the bill.
“Windfall profits taxes don’t lower prices for consumers. We’ve seen this policy before—it deterred investment and reduced production. This is a cyclical industry, and targeting earnings in stronger periods undermines the long-term investment needed to keep energy reliable and affordable over time,” API spokesperson Andrea Woods told the DCNF.
(DCNF)
