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RELEASE: WITH GASOLINE PRICES SKY HIGH, KHANNA, WHITEHOUSE ANNOUNCE CURB ON BIG OIL COMPANIES ENGAGED IN PROFITEERING TO PROVIDE RELIEF AT THE PUMP

March 10, 2022

Big Oil Windfall Profits Tax would protect consumers from giant oil companies taking advantage of world events to jack up prices

Washington, D.C. — With gas prices skyrocketing in recent days against a backdrop of continued Russian aggression in Eastern Europe, Representative Ro Khanna (D-CA) and U.S. Senator Sheldon Whitehouse (D-RI) are introducing the bicameral Big Oil Windfall Profits Tax to curb profiteering by oil companies and provide Americans relief at the gas pump.

"This is a bill to reduce gas prices and hold Big Oil accountable. As Russia's invasion of Ukraine sends gas prices soaring, fossil fuel companies are raking in record profits. These companies have made billions and used the profits to enrich their own shareholders while average Americans are hurting at the pump," said Khanna. "I'm glad to introduce this legislation with Senator Whitehouse that will provide an incentive to cap gas prices and put money back in the pockets of consumers."

"While the U.S. severs economic ties with Putin to protect our national security, I am committed to doing everything in my power to limit the fallout for Rhode Islanders who were already getting squeezed before this happened," said Whitehouse. "We've seen this script before, and we cannot allow the fossil fuel industry to once again collect a massive windfall by taking advantage of an international crisis. I propose sending Big Oil's big windfall back to the hardworking people who paid for it at the gas pump. Over the longer term, speeding up the transition to renewables will lower energy costs, insulate consumers from price spikes, and reduce Western nations' dependence on foreign despots and greedy fossil fuel companies."

The price of a gallon of gasoline is up well over a dollar from a year ago, and the price of a barrel of oil is double what it was before the pandemic. Russia's invasion of Ukraine has further disrupted an already volatile global oil market by reducing supply and leading governments to limit imports of Russian energy to help protect the Ukrainian people.

At the same time, big oil companies are reaping near-record profits. In 2021, ExxonMobil's profits jumped over 60 percent over pre-pandemic levels to more than $23 billion. Over that same time period, the price of a gallon of gasoline rose from an average of $2.69 to $3.41. It currently stands at over $4. This increase is not justified by increases in the cost of domestic production, but is driven by international markets controlled by fossil fuel cartels.

The Big Oil Windfall Profits Tax would provide consumers guaranteed relief while maintaining American competitiveness and reducing pressure on inflation by attacking corporate profiteering. Under the Khanna/Whitehouse bill, large oil companies that produce or import at least 300,000 barrels of oil per day (or did so in 2019) will owe a per-barrel 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, a period when large oil companies were already earning large profits. The quarterly tax will apply to both domestically produced and imported barrels of oil to ensure a level playing field.

Smaller companies accounting for roughly 70 percent of the domestic production will be exempt, so oil giants like Exxon Mobil and Chevron cannot simply gouge consumers further without the threat of losing market share.

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. At $120 per barrel of oil, the levy would raise approximately $45 billion per year. At this price, single filers would receive approximately $240 each year, while joint filers would receive roughly $360 each year.

The Senate legislation is cosponsored by Senators Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Richard Blumenthal (D-CT), Tammy Baldwin (D-WI), Sherrod Brown (D-OH), Jack Reed (D-RI), Ed Markey (D-MA), Cory Booker (D-NJ), Michael Bennet (D-CO), and Bob Casey (D-PA).

Text of the House bill can be found here.

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