As a result, navigating domestic politics often runs counter to that climate objective. Higher oil prices are a big deal because their consequences are so visible. Especially right before an election when inflation this year is the biggest Democratic disadvantage (besides gerrymandering and voter suppression). Thus do we have the administration doing what it can to get fossil fuel production momentarily boosted. That’s exactly what we must not be doing for the climate and exactly what political analysts say we must be doing to have a ghost of a chance of keeping hold of Congress. Conundrum city.
Americans—and the rest of the world, of course—make considerable sacrifices because of fossil fuel use. The tally of premature deaths alone, along with asthma and other respiratory ailments, plus the devastating economic and social impacts of extraction, transportation, and refining are horrific. The use of those fuels isn’t just a cost to our wallets at the gas pump and elsewhere but a cost to our lungs and hearts, a sacrifice our society has made—despite dissenters—for all the advantages of mobility it provides. Of course, many people around the world get few of the advantages and most of the inevitable side effects.
But right now in the United States while we work out all the messiness and infighting associated with transforming our energy, transportation, agriculture, land use, and construction systems, it shouldn’t just be “average, hard-working Americans”—as Republicans so often publicly say while secretly snickering—who do all the sacrificing. Big Oil certainly isn’t doing any. In the second quarter of this year alone, the top three oil companies made a record $41 billion in profits.
Jordan Schreiber, director of Energy and Environment at Accountable U.S. said at the time, “This year is shaping up to be even better than the last for the oil and gas industry. Unfortunately for consumers, good news for Big Oil’s bottom line never seems to be good news for them. Oil and gas giants like Halliburton admit it’s in their best interest to create a perpetual threat of undersupply to keep consumer prices high and their insane profits rolling in. Make no mistake, these oil and gas companies would rather take their billions in profits and pass them on to wealthy industry executives than do anything to stabilize gas prices for consumers.”
They should sacrifice. Legislation to make this happen in the form of a windfall profits tax—S.3802—was introduced in the Senate and House months ago by Sen. Sheldon Whitehouse of Rhode Island and Rep. Ro Khanna of California, along with numerous co-sponsors.
It provides that oil companies producing or importing at least 300,000 barrels of oil a day as of 2019 will owe a per-barrel tax equal to 50% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019. To be clear, at that time Big Oil was already bringing in big profits. Smaller companies that account for 70% of domestic production will be exempt. Revenue from the tax would be returned to people as a quarterly rebate, with a phase-out for single filers making more than $75,000 annually, $150,000 for joint filers.
If people in the United States have to sacrifice through increased costs from oil profiteers, make the profiteers sacrifice some of those profits. Call me radical, but I think the bill would let these companies off too easy. I can’t go into the local gas station and ask them to knock 50% off the price rise on my fill-up.
The European Union just passed its own windfall profits tax on energy, and U.N. Secretary-General António Guterres is calling for a global windfall profits tax to pay for loss and damages caused by climate change in those nations that have added least to global warming. California Gov. Gavin Newsom will soon propose details of a state windfall profits tax.
Naturally, the industry opposes the bill: the Tax Foundation and the Chamber of Commerce and the American Petroleum Institute all oppose it. One complaint is that the windfall profits tax that President Jimmy Carter got through Congress didn’t raise as much revenue as it was supposed to and it suppressed new production by 3-6%. Well, pshaw! The reason it didn’t raise as much revenue as predicted is that global oil prices collapsed in 1982. No windfall profits, no windfall tax collections. And lower prices meant some finds were no longer economical to produce. It is also typically forgotten by the naysayers that the windfall profits tax replaced the far more draconian price controls. The U.S. industry at the time was only producing less than a third as much oil as it now does thanks to new technology.
Ali Bekhtaqui reports at Barron’s:
Nobel laureate economist Joseph Stiglitz says the world's energy giants should pay a special tax on their massive profits. To him, the companies "didn't do anything to deserve" the windfall. ...
"Sometimes we have this discussion: are profits exploitation or are profits the just deserts of having invested more, putting out more effort," Stiglitz said in an interview with AFP in Paris.
"This is a particular case where there is no debate," the 2001 Nobel winner said.
"It is very clear that the oil companies didn't do anything to deserve the high oil prices. It was (Russian President Vladimir) Putin's invasion of Ukraine that was at the source of the problem," Stiglitz said.
Look, the oil and gas industry shills lied to us and keep lying. Today, instead of downright climate change-denying, their advertising declares a woke greenness, but as we know, their actions don’t come close to measuring up. They still want their tax subsidies, their public land leases, their new pipelines, their new refineries, and their new liquefied natural gas export terminals. They still pay lobbyists to fight climate-related legislation. As we know, they spew a lot more methane than they admitted to the Environmental Protection Agency not so long ago—a whole lot more—which makes the claims about natural gas being a clean fuel because it produces less carbon dioxide than coal when it’s burned kind of beside the point. The “fracking revolution,” as the industry likes to call it, is a filthy process with plenty of downsides in addition to the fact that its success at goosing production has prolonged the transformation to zero emissions.
It’s little wonder that the industry and its marionettes in the business press, Congress, and Business Roundtable oppose a windfall profits tax that would sop up some of extra profit the industry is pulling in as a result of a disrupted economy made worse by the war in Ukraine. There’s a lot more to it, but that’s a deep, deep rabbit hole to explore another time.
Some will argue that the windfall profits tax is merely performative in that there is obviously no way the current Congress or, honestly, any reasonably obtainable Congress in the next few years would pass such legislation. That’s so even though a poll taken shortly after the bill was introduced found that even 73% of Republicans supported the idea. (Not, of course, elected Republicans.) However, this very modest but actually helpful aid to “average, hard-working Americans” ought to be something a not-yet-elected generation of Republicans could buy into.
Okay, I know, pure fantasy, right? The obstacles in the way of even short-term Band-Aid approaches are many and powerful. The longer-term (but not too long) solution to all the evils of oil and gas is the green transformation. Green transportation, green buildings, and … ahem … green agriculture. Obstacles in the way of all that are more complicated, but just as powerful. Such big changes also mean necessary changes in social and economic relations, and that means acknowledging past injustices like environmental racism and making amends part of the transformation. Against that are the most powerful forces of all.
If letting obstacles block us from spurring this transformation were a choice, it would be easy to throw up our hands. But the choice here is between 1) doing everything possible to quickly stop burning hydrocarbons to keep the climate change we’re seeing unfold everyday right now from getting any worse than is already baked in, or 2) playing patsy to the interests that seek to squeeze every drop from the ground and every dollar from the people they can until the oil runs out or they are made to stop. In other words, there is no choice.
On climate action: Faster and better, please.