Demand Grows for Windfall Profits Tax as Goldman Sachs Predicts More Gas Pump Pain

Progressives are arguing that Wall Street’s new prediction of worsening pain at the pump for U.S. consumers this summer underscores the need for Congress to pass Democratic lawmakers’ overwhelmingly popular bill to impose a windfall profits tax on Big Oil.

According to analysts at Goldman Sachs, “oil prices will surge to $140 a barrel this summer, with a drop in Russian production and a gradual recovery in Chinese demand adding to the pressure on already low supplies,” Insider reported Tuesday.

“But they said consumers will feel as though oil has hit $160 a barrel,” the news outlet continued, “because a lack of capacity at refineries means gasoline and fuel prices are rising more than would normally be expected, adding to costs across the economy.”

Oil prices have already increased by roughly 50% this year as a result of Russia’s invasion of Ukraine and mismatches in supply and demand. As of Tuesday, Brent crude, the international benchmark, and WTI crude, the U.S. benchmark, traded at approximately $119 and $118 a barrel, respectively, while the nationwide average price for a gallon of gas hit $4.92.

Since consumer demand returned following a brief pandemic-driven decline in 2020, investors have pressured oil giants to suppress production to push prices higher. Last year, as average gas prices in the U.S. steadily climbed—reaching about $3.40 per gallon in December 2021, up from $2.10 a year before—25 of the world’s biggest fossil fuel corporations enjoyed a record $205 billion in profits.

Oil and gas companies have hiked prices even further in 2022—especially after President Joe Biden’s early March announcement of a U.S. ban on imports of Russian fossil fuels. Accusations of war profiteering have grown since petroleum executives in April bragged about their “best quarter ever.”

A report published last month by the watchdog group Accountable.US found that “in the first three months of the year, 21 oil and gas companies made over $41 billion in profits, more than doubling profits from just a year ago. This is, on average, $1.2 billion more per company than the same time last year thanks to—as the companies themselves say—high oil prices and the crisis in Ukraine.”

Chevron and ExxonMobil respectively raked in $6.3 billion and $5.5 billion in the first quarter of this year, meaning that they quadrupled and doubled their profits compared with the previous year even as the U.S. economy contracted.

“We need a windfall profits tax on Big Oil,” Robert Reich, a professor of public policy at the University of California, Berkeley, tweeted Tuesday.

To put an end to such behavior, dozens of progressive advocacy groups have been urging Senate Majority Leader Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) to support the Big Oil Windfall Profits Tax, which Sen. Elizabeth Warren (D-Mass.) has said can help Democrats avert “big losses” in November’s pivotal midterms.

Originally published at Commondreams.org, written by Kenny Stancil.