Produced and edited by Josh Miller-Lewis and Josh Hirschfeld-Kroen
Countries around the world are enacting windfall profits taxes on record oil & gas profits. But despite criticizing oil & gas companies, Joe Biden refuses to endorse the one action that would hold them accountable. Here’s what we can learn from UK, Italy, Spain & others. Below is a full transcript of the video where we discuss.
[Narrator]: High energy prices are causing chaos and misery across the world.
[Person in news clip]: Somebody’s gotta be winning and I know it ain’t us working folks.
[Narrator]: And the scandal of oil and gas companies profiting off of war and inflation, well, that’s global, too. To his credit, Joe Biden has criticized oil and gas companies’ massive profits:
[Clip of Biden at press conference]: We’re going to make sure that everybody knows Exxon’s profits. Exxon made more money than God.
[Narrator]: But unlike other governments around the world, Biden has so far refused to endorse the one action that would actually hold Big Oil accountable: a windfall profits tax.
[Clip of the British Energy Prime Minister]: The new levy will be charged on profits of oil and gas companies at a rate of 25 percent.
[Clip of the Prime Minister of Spain]: We are going to take away the extraordinary profits that energy companies are making. They can afford it.
[Narrator]: Here’s what the world can teach us about taxing Big Oil’s dirty profits. A windfall profits tax is pretty much exactly what it sounds like, a tax on oil + gas companies for exorbitant profits they didn’t earn or expect. And the revenue from that tax can be redistributed to working people. These companies didn’t create new wealth. They’re not delivering a product that’s twice as good as it was in 2019. They’re just profiting off of inflation and war, riding record high prices so they can deliver huge dividends to their shareholders, and invest billions of dollars in stock buybacks.
A windfall tax would take some of those billions back, giving them directly to people who are struggling the most with skyrocketing costs of living.
People like Elsie.
[Interviewer on “Good Morning Britain”]: Elsie is 77. Her energy bills have gone from 17 pounds a month to 85 pounds a month. To cut down on spending, Prime Minister, Elsie has now resorted to eating one meal a day. She gets up early in the morning to use her Freedom Bus pass to stay on buses all day to avoid using energy at home.
[Borris Johnson]: Just a reminder that the bus pass Elsie is using is something I introduced. Just parenthetically.
[Interviewer on “Good Morning Britain”]: Oh, so Elsie should be grateful to you for your bus pass?
[Narrator]: In the UK, Boris Johnson’s Conservative government resisted a windfall tax for months, relying on one argument in particular.
[Borris Johnson]: If you put a windfall tax on the energy companies, you discourage them from making the investments that we want to see.
[Narrator]: That argument, that a windfall tax would discourage investment in domestic oil supply, was refuted by the chief executive of British Petroleum himself. When asked which of their investments BP would abandon as a result of a windfall tax, he said: “There are none that we wouldn’t do”.
[Clip of Ed Milliband]: “There are none that we wouldn’t do.” Even BP doesn’t buy the Tory argument against a windfall tax on BP!
[Narrator]: That’s Ed Milliband – a representative of the Labour party, which led the months-long campaign for a windfall tax in the UK, eventually forcing the conservative chancellor to support the measure…with a rebrand.
[Clip of Rishi Sunak]: I am sympathetic to the argument to tax those profits fairly. And so, like previous governments, including conservative ones, we will introduce a temporary targeted energy profits levy.
[Narrator]: That’s just another name for a windfall profits tax. Here’s what it does:
Every household in the UK receives a 400 pound discount on their energy bill. That’s roughly 480 dollars. On top of that, the 9 million poorest households get another 650 pounds as a direct payment, with additional support for pensioners, and people on disability. And all of those payments are funded, in part, by a 25% surcharge on the windfall profits of oil and gas companies, raising the rate from 40 to 65%.
The Conservative party still found a way to give a handout to energy companies, rewarding them for investing in increased domestic production. Whether that measure will do anything to actually change investment decisions, well, we’ll just have to wait and see. But that’s just the UK.
In Italy, a windfall tax raised the rate on energy profits from 10 to 25%. They’re using that money to help families keep their energy bills around where they were in 2021, while also providing 200 euros in direct payments to poorer families, and investing in renewable energy. In Spain, a windfall tax was passed all the way back in September of 2021 – allowing them to reduce the value-added tax on energy bills from 21% down to 10%. Romania, Bulgaria, and Argentina also designed their own versions of the tax.
But all of these countries have one thing in common: they’re spending big to provide tangible inflation relief for working people, and they’re using excess oil and gas profits to do it.
Back in the US, President Biden has talked a lot about how oil and gas companies are price gouging consumers.
[President Biden at the White House]: US oil companies that are recording their largest profits in years, they have a choice.
[Narrator]: But the Biden administration’s only proposal is a gas tax holiday.
[President Biden]: I’ve asked Congress, will they go and temporarily end the tax on gasoline at the pump.
[Narrator]: Nevermind the fact it’s estimated to save drivers less than five dollars a month, while slashing funding that maintains our roads and bridges. It would also be one more handout to oil and gas companies. Here’s what a former Obama economic adviser had to say about it.
[Jason Furman]: I don’t think that’s a particularly good idea. There’s nothing that says the companies need to pass the savings on. They could just keep that extra profit for themselves.
[Paul Rudd meme]: Huh, who would have thought. Not me.
[Narrator]: Instead of more half-measures, Biden could follow in the footsteps of the U.K., Spain and Italy, and endorse a plan authored by Senator Sheldon Whitehouse of Rhode Island.
[Sen. Whitehouse]: Share the windfall profits. Our oil companies, when they have that opportunity, don’t dial it back to help consumers. They just pocket it. That’s what we’re dealing with. That’s the short-run problem.
[Narrator]: The long-run problem is that the same companies that are now profiting during wartime have done everything in their power to block renewable energy for decades.
[Sen. Whitehouse]: If we had solved this problem 10 years ago, we wouldn’t have this vulnerability. If we had solved this 20 years ago, we wouldn’t have this vulnerability. We are hostages to the oil and gas industry, which is now telling us that the solution to the hostages, is to buy more oil and gas. What could be more expected?
[Narrator]: Instead of begging oil executives to start playing nice, Democrats need to start holding them accountable and delivering for working people. And they’ll need to get creative. They can start by calling up their friends across the pond.