With gas prices rising in recent days against a backdrop of continued Russian aggression in Eastern Europe, U.S. Senator Bob Casey (D-PA) joined his Senate colleagues in introducing the Big Oil Windfall Profits Tax Act to curb profiteering by oil companies and provide Americans relief at the gas pump. This legislation would impose a new excise tax on oil extracted or imported by large oil corporations, and revenue raised from a tax on the windfall profits of these companies would be returned to consumers in the form of a quarterly rebate.

The price of a gallon of gasoline is up over a dollar from a year ago, and the price of a barrel of oil is double what it was before the pandemic. Russia’s invasion of Ukraine has further disrupted an already volatile global oil market by reducing supply and leading governments to limit imports of Russian energy to help protect the Ukrainian people.

At the same time, big oil companies are reaping near-record profits. In 2021, ExxonMobil’s profits jumped over 60 percent over pre-pandemic levels to more than $23 billion. Over that same time period, the price of a gallon of gasoline rose from an average of $2.69 to $3.41 and currently stands at over $4.

Under this bill, large oil companies that extract or import at least 300,000 barrels of oil per day (or did so in 2019) will owe a per-barrel tax equal to 50 percent of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019. Smaller companies accounting for roughly 70 percent of the domestic production would be exempt, so oil giants like Exxon Mobil and Chevron cannot simply gouge consumers further without the threat of losing market share.

Revenue raised from the windfall profits of big oil companies would be returned to consumers in the form of a quarterly rebate. With oil currently priced at more than $120 per barrel, the levy would raise approximately $45 billion per year. At this price, single filers would receive approximately $240 each year, while joint filers would receive roughly $360 each year.

This legislation is led by U.S. Senator Sheldon Whitehouse (D-RI) and cosponsored by Senators Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Richard Blumenthal (D-CT), Tammy Baldwin (D-WI), Sherrod Brown (D-OH), Ed Markey (D-MA) and Cory Booker (D-NJ). U.S. Congressman Ro Khanna (D-CA-17) also introduced the legislation in the U.S. House of Representatives.

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