The reasons for high gas prices are varied and intertwined. Our economy’s rapid recovery from COVID-19 has created a surge in demand as people resume their pre-pandemic lives.
These factors became even more apparent in per-gallon prices as we entered peak driving season last weekend and companies began switching to their more expensive summer fuel blends. And, of course, Vladimir Putin’s brutal invasion of Ukraine prompted many countries to boycott Russian oil imports, further reducing global supply.
However, that’s not the full explanation for the astronomical numbers you face at the pump. To figure out the rest of the equation, just look at the balance sheets of the world’s five largest oil companies – Shell, Chevron, Exxon Mobil, ConocoPhillips and BP. Oil companies charge consumers sky-high prices at the pump – far beyond their costs – because they can. Basically, they see the crisis as an opportunity to make even bigger profits.
In the first quarter of last year, Shell made a profit of $3.2 billion. During the same period in 2022, his fortune increased to $9.1 billion. Exxon Mobil posted net sales of $2.7 billion in the first quarter of 2021, a number that skyrocketed to $8.8 billion in the first quarter of 2022. Five oil giants are up 300 percent in profit this year than last year at this time. This is not the result of the pandemic or the war. It’s just simple greed.
Nor are the oil companies using those profits to expand production to meet the increasing demand of people returning to work and their daily lives. Instead, the corporations spend the money on big dividends for shareholders and tens of billions of dollars in share buybacks for their investors.
It is unscrupulous for this industry to take advantage of the aftermath of the terrible war and add to people’s economic pain.
Some people have suggested that we suspend the state gasoline tax — about 18.4 cents a gallon — to ease some of the pain at the pump. I support this idea, but there are a few things we need to be aware of. First, if we get rid of the federal gas tax, the oil companies will simply raise their prices and collect what would have been paid as a tax. And that will not help consumers at all.
Second, the federal gas tax provides funding for the Highway Trust Fund, which finances the construction and maintenance of roads, highways, bridges and public transportation systems nationwide.
That’s why I introduced the Federal Gas Tax Suspension and Windfall Profits Tax Act to address these two issues simultaneously.
The bill would suspend the state gas tax until the end of 2023, providing immediate relief at the pump. To prevent oil majors from pumping up prices further, the bill would also impose a new 50 percent tax on incomes exceeding their appropriately inflated average profit. This windfall profits tax would be used to fund highway and transit projects while the gas tax is suspended.
This isn’t a complete solution, but it’s a start. Oil companies could still choose to grow their profits even if they lost half of those earnings. That’s why the anti-price gouging bill passed by the House of Representatives last month, which would empower the Federal Trade Commission to crack down on such abusive practices and punish bad actors, is so important.
To get us through the ravages of inflation, we need price relief at the pump immediately. The combination of a gas tax exemption and an unexpected profit tax for the oil companies could help.
But at the end of the day, if we don’t wean ourselves off fossil fuels, we will be left at the mercy of the oil industry, petromonarchies, and Russian dictators. In the long run we will destroy our planet if we stay on course.
We must build a green new economy that eliminates our dependence on oil and dramatically expands the use of renewable energy sources. Otherwise, future generations will literally pay the price.
Adam B Schiff
Adam B. Schiff, a Democrat, represents California’s 28th congressional district and chairs the House Permanent Select Committee on Intelligence. He wrote this for the Los Angeles Times. — ed.
(Tribune Content Agency)
From Korea Herald (firstname.lastname@example.org)