Russia’s invasion of Ukraine has resulted in a humanitarian catastrophe, with tens of thousands likely killed, millions of external and internal war refugees and charges of ghastly war crimes. Another effect of Vladimir Putin’s war, now in its second month, has been skyrocketing gas and oil prices worldwide, linked with sanctions targeting Russia’s fossil fuel industry.
Now a new report titled, “Big Oil’s Wartime Bonus,” provides analysis of how major oil companies are profiteering off the war in Ukraine, while blaming U.S. environmental regulations and pushing for more government permits allowing for increased drilling for fossil fuels. The research report was a joint project of Public Citizen, Friends of the Earth and Bailout Watch.
Between The Lines’ Scott Harris spoke with Alan Zibel, research director with Public Citizen, who summarizes the findings of the “Big Oil’s Wartime Bonus” report, and discusses the call by some in Congress to impose a windfall profits tax on oil and gas companies accused of wartime profiteering.
ALAN ZIBEL: The industry for the past year — lobbyists in and in D.C. have been blaming Biden and saying because Biden stopped the Keystone pipeline and Biden put a pause on drilling on federal lands and criticized the oil industry in the campaign. They decided to kind of pin rising gas prices on Biden.
And then after Russia invaded Ukraine, prices, of course, went way up because it’s all determined by speculators and oil traders who really determine crude oil prices.
You know, the oil lobby in D.C., the American Petroleum Institute and other trade groups, maybe a day or two before Russia invaded or they were ready with these talking points right on the dial, that it’s all Biden’s fault. You know, “We need to wait to ramp up leasing. We have to ramp up offshore drilling. We have to build the Keystone pipeline, blah, blah, blah, blah.” And it was all nonsense. These are very, very long-term things that would take six months, ten months, years. It would take Keystone pipeline years to impact oil supply.
And, you know, our contention with Keystone is that it would make prices even higher. But the point is that they were trying to blame Biden for everything. It really made no sense. They were very aggressive at it, right?
And so we wanted to put out this report to kind of counter that argument and point out that over the past year, as the oil industry’s fortunes have turned around really because the economy got better and people started driving again — they started buying back their stock, basically taking stock and using corporate funds to to retire it, which makes the existing shareholders’ holdings worth more and increasing dividends. So we looked at 20 U.S. oil companies and found that over this 12-month period, they bought back about $46 billion in stock. More than half of the companies boosted their dividends and some of them by really huge amounts. Of the 11 companies raising their dividends, 9 were increases of more than 15 percent and 4 were increases of more than 40 percent.
And they’ve been using a scheme called variable dividends in addition to kind of direct windfall profits immediately into shareholder hands as quickly as possible. We calculated an initial $3 billion in windfall dividends. So they’re really raking in the profits right now with oil. As we all know, gasoline’s somewhere in the in the low $4 a gallon I think it is right now. And crude oil is about $95 or so.
You know, it’s hurting consumers and they are profiting tremendously. I mean, it’s been a record year for profits of the Big Oil giants: Chevron, Exxon, BP, Shell, the majors, as well as, you know, smaller, independent companies just kind of U.S. focused, rather than international.
But that’s what we really want to highlight, kind of push back on the argument that that is all Biden’s fault. You know, Putin to blame for high gas prices. And you also have the oil companies’ own corporate greed and extraordinary profits this past year.
SCOTT HARRIS: Well, Alan, some Democrats in Congress are advocating the imposition of a windfall profits tax on Big Oil. And I’m wondering, what are the chances are that something like that could pass in the House and Senate and what do we hear from the White House, from Joe Biden and his administration?
ALAN ZIDEL: So we at Public Citizen, we were very supportive of this idea of windfall profits tax. Sen. Sheldon Whitehouse in Rhode Island is the main sponsor. I would say it’s hard, given what a mess Congress is these days, right? It’s hard to predict that anything going to get through. But I think this is a fight worth fighting. I haven’t much from the White House about it, from the Biden administration. But, I would hope that they would be full-on supportive of it.
SCOTT HARRIS: Right. Well, how does a windfall profits tax work? And I know there are a couple of different versions of the House and the Senate version, as you mentioned.
ALAN ZIBEL: Well, under the Senate version, you know, oil companies that produce or import at least 300,000 barrels of oil a day would pay 50 percent of the difference between the current oil price and the average price pre-pandemic.
They have it structured as a quarterly tax that would apply to domestic and imported barrels of oil. And the really important part of this is, this would be returned to you and me, right? This would go to ordinary consumers in the form of a rebate and be capped at single households earning more than $75,000 and joint households capped at $150,000.
It’s a good idea and it would raise about $45 billion a year and it would be rebated to consumers. I think that’s that’s worth doing. We really have not heard from the Biden administration and I would hope that they would they would sign on and really push it hard.
Listen to Scott Harris’ in-depth interview with Alan Zibel (25:50) and see more articles and opinion pieces in the Related Links section of this page.
For more information, visit Public Citizen at Citizen.org.
