Leftist politicians and environmentalists are loudly calling for a windfall profits tax on large oil companies after two reported strong first quarter profits.
Exxon Mobil on Friday issued an earnings report of $5.5 billion in profit for the first quarter, which came after the company took a $3.4 billion loss for its divestment in Russia. And Chevron, the second largest U.S. producer, tallied a $6.3 billion profit in 2022’s first quarter. This was an almost 20% increase from the previous quarter and quadruple the profits from the same period in 2021.
Democrats, facing one calamitous economic report after another and barreling towards a midterm bloodbath in November, are attempting to seize on a populist issue. A bill targeting oil company profits would place a 50% tax on the difference between the current sale price of a barrel of oil and its average from 2015-2019 — roughly $66.
This is a new/old idea that was attempted by President Jimmy Carter in 1980, with a downturn in domestic production as a result. But that’s just history, right? Rep. Ro Khanna (D-Calif) and Sen. Sheldon Whitehouse (D-RI) introduced a windfall tax bill to “stop this profiteering” while American drivers “suffer at the pump.”
Yet another windfall tax bill has the support of a pair of usual suspects, Sen. Bernie Sanders (I-Vt) and Rep. Jamaal Bowman (D-NY) over perceived failures to “increase supply or expand production.” Instead, the legislators charge, Exxon Mobil is tripling its stock buyback program to $30 billion “to enrich wealthy shareholders.”
In 2021, Exxon Mobil reported a record profit of $23 billion, but that came on the heels of a $22.4 billion loss in 2020 due to the COVID-19 pandemic. Other oil companies such as Chevron, BP, and Shell had a similar roller coaster ride in the previous two years.
Some executives say they are choosing stock buybacks to put money back into shareholder’s pockets rather than cycling their profits to produce more oil — shareholders who took a financial beating in the first year of the pandemic. But the Democratic Socialists of the world and their allies will not take a moment to look at the facts when it’s far easier to demagogue an issue to sway voters their way.