A windfall energy profits tax will make gas, oil, and diesel even more expensive. When products are taxed, producers will reduce investment and cut production. When taxed, companies pass that tax on to the consumer in the form of higher prices. Companies don’t pay taxes, consumers do.
We were told that higher prices for gas and oil, resulting from the invasion of Ukraine and from Europe’s decision to stop buying Russian energy, were generating windfall profits for both fossil fuel and transportation companies. Farmers. railroads and trucking companies all depend on diesel fuel. Higher prices are caused by the higher prices they have to pay for fuel.
It is true; there were windfall profits when gas prices soared. However, the wholesale gas price is now lower than the peak it reached at the worst point since the outbreak of war. The price of oil is down by a third from the artificial Ukraine War highs. If government were to now impose a windfall tax, based on a one-off shift in prices that gave companies a bonus, are we to believe they would remove that tax when that price change disappears? The weakness of the proposed windfall tax is that it does not describe the nature of the windfall, or seek to fairly reflect its size and duration.
Few will be sympathetic to large energy companies. However, if the United States attempts energy taxation that is materially higher than elsewhere, and demonstrates an unwillingness to allow development of our many domestic sources, we will find it more difficult to attract the investment and jobs needed to produce more domestic energy. Customers will end up paying higher taxes, and business will migrate to lower or no tax countries. Energy companies are already looking at alternatives to operating in our government’s regulatory and energy-hostile environment.
John Branthoover
Arlington
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