Oil companies should pay windfall profits tax :: WRAL.com

CBC Editorial: Friday, June 10, 2022; Editorial #8766
The following is the opinion of Capitol Broadcasting Company

North Carolinians along with most other folks who visit a gas station these days, now pay close to, or in excess of, $5.00 a gallon. why?

Since the election of Barack Obama, domestic oil production has more than doubled. Even as retail costs at the pump are skyrocketing, the nation’s oil and gas industry is sitting on more than 9,000 unused permits to drill for crude on federal and Indian lands. And they have plenty of money to do it – record profits. These companies are awash in cash that not only has given them a bounce after the pandemic trimmed consumption and lowered prices – but with profit levels that haven’t been seen in 25 years

If companies won’t act to increase production and set a reasonable price level, state and federal governments need to step in on behalf of consumers. The must enforce price gauging laws and impose taxes on excess profits to be fair to consumers.

A month ago it was reported that ExxonMobil’s net profit more than doubled to $5.5 billion from a year earlier – and that was after taking a $3.4 billion charge from closing down its operations in Russia. Shell reports its highest profits ever and Chevron’s quarterly profit was the biggest in nearly a decade.

What are these companies doing with the windfall of cash – that has come largely as a result of Russia’s unconscionable aggression in Ukraine? Why is there corporate silence instead of loud cheers or “drill baby drill?”

Because oil and gas company execs are more interested in pumping up their own wealth – and that of their investors – than making sure American families can afford to get to and from their jobs, drop their kids at school, pick up groceries and take care of the other basic needs of daily life. These companies are buying back their stock and sending cash to shareholders.

None of this has been lost on North Carolina’s consumers. Since the first of the year, there have been about 180 price gouging complaints related to the motor fuels filed with state Attorney General Josh Stein. Those complaints are under review to determine whether the prices are the result of cost increases or schemes to exploit market gyrations. The state price gouging law is in effect, Stein’s office said.

After the state suffered a gas shortage due to the Colonial Pipeline outage in May of 2021, Stein’s office, following on complaints, reached settlements in three gas-price-gouging lawsuits.

“Rapid economic growth, supply chain disruptions, and the Russian invasion of Ukraine are having a real impact on gas prices,” Stein said in a recent statement. “Gas stations may need to increase the price of gas because their costs have jumped, but they can’t take advantage of this situation to charge egregious prices and exploit North Carolinians.”

Stein said if consumers see prices that seem to be beyond reason, they should contact his office either by telephone at 1-877-5-NO-SCAM (1-800-566-7226) or ncdoj.gov/price-gouging so an investigation can be initiated.

When buying gas at the pump, there is one thing that is not affected by the ups-and-downs of crude oil prices, global markets and the machinations of corporate executives: taxes. Taxes are a set rate, per gallon. So, in North Carolina, no matter the total cost, consumers pay $0.385 per gallon in state tax and $0.184 per gallon in federal tax.

Here’s where your money goes when you buy a gallon of gasoline now, compared to a year ago.

13% TAXES $0.57 19% TAXES $0.55
11% RETAILER $0.50 13% RETAILER $0.37
17% REFINING $0.78 14% REFINING $0.39
59% CRUDE $2.74 54% CRUDE $1.54
100% TOTAL $4.57 100% TOTAL $2.85

NOTE: NC gasoline tax is $0.385/gallon 2022; NC Gasoline tax was $0.361/gallon 2021; Federal gasoline tax is $0.184/gallon

While the big oil and gas companies have complained about their ability to do more domestic exploration, the truth is that they aren’t even taking advantage of the opportunities they have. There’s no excuse, that with more than 9,000 permits for drilling on federal and Indian lands there isn’t more being done.

Our nation hasn’t been captive — since the efforts by President Barack Obama’s administration to expand domestic production — to global supplies or prices. “During the first four months of 2022, the United States exported 74% of its liquefied natural gas (LNG) to Europe, compared with an annual average of 34% last year,” reported the US Energy Information Administration. The United States is largely energy independent and should act like it.

Like Britain’s conservative government did last month, our federal government should impose a windfall tax on the HUGE profits these companies are reaping. Consumers should NOT be exploited. In Britain, the 25% windfall tax is being used to support $19 billion in assistance for households that have had to cope with the big hike in cost-of-living.

Windfall profits shouldn’t enrich oil company executives and Wall Street investors at the cost of struggling families. It is horrible enough that the people of Ukraine are in a daily life-and-death struggle because of Vladimir Putin’s unjustified aggression.

American families should not have to suffer the collateral impact. There is a windfall tax proposal on big oil companies that would provide a quarterly rebate to middle and lower income consumers equal to about $360 annually for those who file joint returns.

Since 2008, the nation has worked hard toward achieving energy independent – ​​and for a reason. That reason is evident now and consumers shouldn’t be taken advantage of – but offered the understanding and relief a windfall profits tax would provide.

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