The Weekly Journal | Environment
By Gary Parkinson - June 16, 2022
Long Past Time For Windfall Profit Tax Against Big Oil
Estimated reading time: 14 minutes
Inflation has reached near record level highs. The cost of living for the average family is skyrocketing. People are forced to make impossible choices on how to keep food on the table or a roof over their family’s heads. Progress combatting climate change by governments is stalling while new innovative companies, including those within sustainable fashion, take the lead to reduce greenhouse gas emissions (GHGs) on a micro level.
Despite all of this, we’re still subjected to these unbelievable subject lines in the media: big oil companies more than tripled their profits in the first quarter of 2022. Read that again: some of the wealthiest firms and biggest contributors of GHG emissions that threaten the future of our planet are pocketing record high profits. All the while, ordinary citizens are gouged by unaffordable prices at the pumps that leave their household budgets teetering on the brink.
Big oil is a sinful reminder of the power of human greed
The question has to be asked: how is it possible that the world is still under the thumb of the biggest oil and gas companies? How are these firms able to get away with driving up prices to run cars and heat homes using fossil fuels that are directly responsible for the depletion of our ozone layer? Remember that basic economic theory suggests that if it costs companies more to produce products, their profits should be smaller, not larger.
Let’s remember that, in 2021, big oil took money to the bank thanks to the recovery from the COVID-19 pandemic. As lockdowns were lifted and people were free to start moving around and travelling again, they decided to hit the road or book a flight in order to get away from home for a while. Naturally, this caused a spike in demand, and prices rose to manage the supply.
Here’s what the oil companies don’t want people to know. In the first nine months of 2021, companies like Exxon, Chevron, Shell, and BP earned $174 billion in profits. The third quarter of the year, which includes the summer travel months, saw these same companies rake in $74 billion in profits. When you were struggling to pay for a road trip with your family or a vacation to another province or country, these wealthy executives were lining their pockets with the money you could barely afford to spend on those trips.
And, yet, those earnings pale in comparison to the profits they pocketed in the first quarter of 2022. Those same companies brought in an astounding 300 percent more in profits in the first quarter of 2022 compared to the same period of time in 2021.
Open admissions of profiteering from human tragedy
If you think the actions of big oil can’t get more sick, the bottom of the elevator shaft is about to completely fall out. The CEO of Shell, whose name is not worth publicising, openly admits that their company has benefited from the war in Ukraine and supply chain shortages. He also confessed that their record high profits will be used to buy back shares and dividends of the company to further enrich their most wealthy shareholders.
This is the current state of affairs with these big oil companies. Rather than use their sky high profits to invest in ways to lower oil and gas costs, or to commit to greener technologies that will improve the health of the planet, they’re choosing to keep all of that money for themselves.
Environmental advocacy groups are, rightly, challenging big oil over these decisions. Lori Lodes, Executive Director of Climate Power, places the blame squarely on the shoulders of greedy oil executives, selfish shareholders, and inactive governments that allow these companies to get away with their actions.
“The greed of these companies is staggering. We’ve heard their executives bragging about how much the agony of inflation and the tragedy of the war in Ukraine has allowed them to raise prices. These profits are going right into their pockets.”
Big oil flies in the face of the 2030 climate crisis deadline
None of this makes any sense to the average citizen in Canada or anywhere else in the world. But the most unthinkable aspect of this entire dilemma is that it runs completely counter to the direction we should be moving as a planet.
The UN Intergovernmental Panel on Climate Change set a rigid deadline of 2030 to reduce by half the amount of GHG emissions in the atmosphere, and to achieve a net-zero target by 2050. According to the science within that report, we risk irreversible destruction of the planet if we fail to take the threat of climate change seriously and reduce our reliance on fossil fuels.
So why are these oil executives and faceless shareholders able to get away with lining their pockets while the world falls apart around them? Lori Lodes is right when she pins a fair share of the blame on governments around the world. The actions of these oil companies have shown that greed will trump the morally right thing to do if governments refuse to force these companies to pay a penalty for their actions.
It’s long past time for a windfall and carbon tax on big oil
The United States Congress is currently proposing a plan called The Big Oil Windfall Profits Tax, which would place a 50 percent per barrel tax on every penny that oil prices are inflated above pre-pandemic price points. It remains to be seen if that bill will pass into law, though staunch Republican support for big oil makes it highly doubtful.
In Canada, a similar measure was put before Parliament in May 2022 by the NDP. The purpose of this bill was to cancel all federal subsidies to support oil and gas companies by the end of 2022, which would prevent oil companies from using the carbon capture trade-off clauses to buy their way around strict carbon emission standards.
The Canadian government subsidizes much of the oil and gas sector by claiming the industry is vital to economic growth, thereby requiring federal support to help these companies grow. It’s all smoke and mirrors as the 2030 climate targets mean oil and gas should be less crucial to economic growth, creating opportunities to make these executives pay more as the NDP bill suggested. Unfortunately, the motion was defeated by joint Liberal and Conservative opposition.
In whatever form it takes and in as many countries as it can be enacted into law, a windfall and carbon pricing tax on big oil is more necessary now than ever before. It’s time to fight back against these greedy executives for the sake of our own household budgets and especially for the protection of our fragile environment. We can’t let them get away with this any longer!