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US Oil Firms Set to Reap Up to $126 Billion in Extra Profits Amid War on Ukraine

Rep. Ro Khanna is pushing for a Big Oil Windfall Profits Tax to stop such rampant profiteering.

The Phillips 66 refinery is pictured on March 1, 2016, in Wilmington, California.

A new analysis released Tuesday estimates that U.S. oil and gas corporations are poised to rake in windfall profits of up to $126 billion this year as they exploit Russia’s deadly assault on Ukraine to raise prices at the pump.

Conducted by Oil Change International, Greenpeace USA, and Global Witness, the analysis uses a database that tracks the fossil fuel industry’s production economics to assess how much money the industry is set to make as a result of high global oil prices.

“Under conservative estimates, we find the U.S. upstream oil and gas industry will collect a windfall of $37 to $126 billion in 2022 alone,” the groups’ report states.

The higher-end profit estimate is dependent on oil prices spiking to $120 per barrel this summer and remaining elevated as the West moves to restrict Russian oil imports — a major opportunity for U.S. fossil fuel companies, particularly as the Biden administration looks to ramp up gas exports to Europe.

If oil prices average $88 per barrel, the new analysis finds, the U.S. oil and gas industry would reap $37 billion in additional profits in 2022.

The report notes that the top beneficiaries of the windfall would be industry giants ConocoPhillips, Chevron, Occidental Petroleum, and ExxonMobil.

“It is unconscionable that U.S. upstream companies like Chevron, Occidental, and ExxonMobil, who receive federal tax subsidies totaling millions of dollars every year, are now set to make billions of dollars more from these high wartime gas prices,” Tim Donaghy, the research manager at Greenpeace USA, said in a statement Tuesday.

“American consumers don’t get a break from high prices just because we drill more here at home,” added Donaghy. “Instead, we get more air and water pollution and higher public health risks. The only way to achieve true energy independence is to cut our ties with fossil fuels entirely.”

Collin Rees, the U.S. program manager at Oil Change International, argued that the new findings bolster the case for a windfall profits tax of the kind congressional Democrats introduced earlier this month.

“From lobbying against climate solutions to actively spreading misinformation, the oil and gas industry has spent decades doing everything in its power to deepen our dependence on dirty fossil fuels,” said Rees. “Now, Big Oil and Gas executives are rolling in cash while working families suffer.”

“It’s high time for Congress to pass a windfall profits tax and prevent the fossil fuel industry from harnessing a war to make billions,” Rees continued. “This can be a clear step toward a fossil-free future if paired with real investments in a renewable energy future.”

The Big Oil Windfall Profits Tax, led by Rep. Ro Khanna (D-Calif.) in the House and Sen. Sheldon Whitehouse (D-R.I.) in the Senate, would hit large fossil fuel companies with a quarterly tax equal to 50% of the difference between the current per-barrel price of oil and the average pre-pandemic price between 2015 and 2019.

“At $120 per barrel of oil, the levy would raise approximately $45 billion per year,” according to a summary released by Khanna’s office. The bill would use the new revenue to pay out a quarterly rebate to consumers.

A recent survey by the League of Conservation Voters found that 80% of U.S. voters — including 73% of Republicans — would support “placing a windfall profits tax on the extra profits oil companies are making from the higher gasoline prices they are charging because of the Russia-Ukraine situation.”

Cassidy DiPaola, a spokesperson for the Stop the Oil Profiteering campaign at Fossil Free Media, said Tuesday that “while Americans are struggling to keep up with high prices at the pump and on their utility bills, Big Oil is profiting off of the war in Ukraine, driving up gas prices and raking in record profits.”

“Fortunately, there’s a simple way to stop this profiteering: put a tax on the excess profits oil companies are making because of this crisis and use the money to send a check to the people who need it,” said DiPaola. “Making Big Oil pay for their greedy war profiteering is a win-win for our families and the climate.”

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