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Warren Says Democrats Are Working on a Bill to Tax Big Oil’s Windfall Profits

The bill could discourage oil companies from jacking up gas prices to pad their profits.

Sen. Elizabeth Warren speaks during a Senate Banking, Housing, and Urban Affairs Committee hearing on Capitol Hill on March 3, 2022, in Washington, D.C.

Gas prices are soaring to record highs, and Sen. Elizabeth Warren (D-Massachusetts) wants to tax fossil fuel companies’ profits to prevent them from fleecing customers at the gas pump.

In a MSNBC appearance on Tuesday, Warren said that she is cosponsoring a bill with Sen. Sheldon Whitehouse (D-Rhode Island) and other Senate Democrats that would tax windfall profits, or sudden and unusually large profits, for oil companies as the Russian invasion has escalated.

“Look, we get it, supply and demand, that prices go up. But profit margins should not go up,” Warren said. “That’s just oil companies gouging when they do that.”

As of Wednesday, the average price in the U.S. for a gallon of regular gas is $4.25, which is the highest it’s ever been, according to AAA. Gas prices are rapidly rising; even just a week ago, the same gallon of gas cost $3.65, which was also a huge increase from pre-pandemic prices.

Prices which were already on the rise as oil and gas companies took advantage of high inflation to make gas more expensive have soared over the past couple of weeks due to Vladimir Putin’s invasion of Ukraine. And while the public is pummeled by high gas prices, fossil fuel companies are making billions in profits.

President Joe Biden has been advising fossil fuel companies not to increase prices in order to pad profits, but without concrete action, companies have no reason not to continue on their current path.

Lawmakers have floated the idea of a windfall profits tax for oil companies in order to combat profiteering at the pump, but have not yet formally announced a bill. Last week, Sen. Bernie Sanders (I-Vermont) suggested the proposal in a tweet, saying that corporations are using the crisis in Ukraine and the pandemic “as an excuse to price gouge customers.”

On Wednesday, Whitehouse also gestured toward the idea in a series of tweets. “This is Putin’s gas price increase. There can be no ‘energy independence’ as long as we power our economy with commodities whose value is determined by global events beyond our control,” Whitehouse wrote.

“Furthermore, the fossil fuel industry should not be allowed to take advantage of a crisis by hiking prices and collecting a massive windfall,” he continued, saying that the U.S. would do better to switch to renewable energies.

Republicans have jumped on high gas prices, saying that the Biden administration isn’t doing anything to mitigate the problem. Earlier this week, Sen. Marsha Blackburn (R-Tennessee) pointed out that gas prices were about $2.17 in 2020 ignoring the fact that the pandemic and mass quarantining had made prices plunge.

Instead of examining whether corporations are taking advantage of crises to price gouge – and data suggests that they are the GOP is teaming up with Big Oil to spout dangerous rhetoric and advocate for more drilling. Not only would this be disastrous for the climate, it would also likely not help with current gas prices at all.

Experts say that it would be nearly impossible for the U.S. to ramp up production in time to address current prices, and U.S. production doesn’t have as large of an impact on prices as Republicans are claiming it does.

In reality, “There is essentially no action the Biden administration could take that would really move the needle on oil prices, or at least policies that would have to do with oil and gas production in the U.S.,” Daniel Raimi, an economist who studies the oil industry for Resources for the Future, told E&E News.

As for the GOP’s argument that ramping up production is necessary for energy independence, that’s a farce too, Raimi said. “As long as we use oil, we are dependent on every other country in the world.”

Another problem that Republicans may not want to own up to is Wall Street. Amos Hochstein, the State Department’s senior advisor for energy security, told the Financial Times that Wall Street investors who are “insisting on dividends and fiscal discipline” in the midst of the crisis are the ones who are truly responsible for the current sky-high gas prices.

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