People are frustrated with soaring energy prices, and Congress has taken notice. Sadly, the response so far has been to recycle old policy ideas that seek to punish producers, hoping they will spur energy bills to take a turn for the better.
Two policies in particular are worth examining. Sen. Sheldon Whitehouse (D-RI) and Rep. Ro Khanna (D-CA) introduced the “Big Oil Windfall Profits Tax Act,” which would permanently taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. sales of crude oil at 50 percent of the gap between the current quarter’s average price and the 2025 average. Meanwhile, Sen. Chuck Schumer (D-NY) and Sen. Ron Wyden (D-OR) have introduced a bill called the “Taxing Buybacks from Big Oil Windfalls Act,” raising the stock buyback tax from 1 percent to 25 percent for oil and gas companies.
While these ideas might have some visceral appeal, taxing producers is the opposite of a solution to a supply crisis.
This is a preview of our full op-ed originally published in The Hill.
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