Lawmakers are finding creative ways to potentially penalize the oil and gas industry for its rampant greed without falling into the GOP trap of assuming an increase in production will magically lead to quick relief at the pump. In addition to being a short-sighted option that ignores the realities of how gas prices are set, drilling for more fossil fuel is a detriment to the environment and goes against President Biden’s own net-zero goals. Plus, those most affected by high gas prices tend to be the folks who feel the impact of climate change the most. Acknowledging that this moment could be a turning point, lawmakers have proposed two bills—the Big Oil Windfall Profits Tax Act and the Consumer Fuel Price Gouging Prevention Act—to offer Americans some financial relief while also holding Big Oil accountable.
First, a bit about the Consumer Fuel Price Gouging Prevention Act, which passed the House last week thanks to overwhelming Democratic support, save for four Democrats voting against it. It received no Republican support, but that’s not at all surprising given the talking points I mentioned. Introduced by Rep. Kim Shrier of Washington state, the bill would allow the president to declare an energy emergency for up to 30 days, though that declaration could be repeatedly renewed. During that time, it would become illegal to sell fuel at a rate deemed “unconscionably excessive and indicates the seller is exploiting the circumstances related to an energy emergency to increase prices unreasonably,” according to the legislation. It would also allow the Federal Trade Commission to issue penalties to companies found within violation of the act, as well as provide states with measures of recourse through civil action.
The Big Oil Windfall Profits Tax Act, which was introduced in March by Rep. Ro Khanna of California, has yet to come up for a vote. Khanna, who is the chair of the House Oversight Committee’s Environment Subcommittee, has been particularly vocal about both high gas prices and the need to swiftly transition away from fossil fuels. He spoke with Time about his bill and why the blame for high prices lies with Big Oil.
“The reality is that every American is sacrificing at this time—paying five bucks, six bucks in my district—at the pump, and they’re seeing big oil making record profits at the same time because of the war in Ukraine,” Khanna told Time. “That’s not fair.” Khanna represents a section of the Bay Area he considers the heart of Silicon Valley, and where some of the most expensive gas prices in the country can be found. Under Khanna’s bill, which is a companion bill to legislation introduced by Sen. Sheldon Whitehouse, “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% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019,” according to a press release.
The tax applies to larger companies, with Khanna explicitly citing ExxonMobil and Chevron, both of whom had outright shocking first quarters, with Exxon raising its share buyback program by $20 billion and Chevron outright admitting it hit a company record by buying back $10 billion in stock during the first quarter of 2022. Under the Big Oil Windfall Profits Tax Act, consumers who’ve seemingly missed the opportunity to benefit from Big Oil’s financial gains would be issued quarterly rebates generated from the taxes levied on fossil fuel companies. The rebates would apply to individuals making $75,000 annually or less or $150,000 annually or less for joint filers.
Both bills face an uphill battle once they reach the Senate, where Democrats hold a slim majority but frequently fail to hit the 60-vote threshold needed to overcome a filibuster. It may take some time before the legislation is taken up, but there are ways to get the ball rolling and keep the issue of high gas prices at the top of lawmakers’ minds. Call on Congress to pass a windfall profits tax.