ABSTRACT

Crude Oil Windfall Profits Taxes: Background and Policy Considerations [March 23, 2022]   [open pdf - 563KB]

From the Document: "Recent increases in gasoline prices and reports of high profits from large oil companies have contributed to congressional interest in a crude oil windfall profits tax. [...] Windfall (or excess) profits taxes are, in theory, designed to tax the portion of profits a firm derives from an external event. Windfall profits are generally believed to be those that represent an excessive, unearned, or unfair gain. Oftentimes, windfall profits taxes are discussed in the context of oil markets, where fluctuations in the price of oil are associated with volatile profits in the industry. It is possible windfall or excess profits may be realized in other industries. It has been suggested that some companies (certain technology companies, for example) may have realized excess or windfall profits as a result of the Coronavirus Disease 2019 (COVID-19) pandemic. Rising oil prices can be associated with rising industry profits, and falling oil prices may be associated with losses in the industry. [...] Oil industry profits have fluctuated with oil prices over time. Profits have tended to be stronger in periods when prices are relatively high, with losses occurring during periods when prices are comparatively low. Numerous economic factors affect industry profitability. Oil prices are highlighted here, as high oil prices are a motivation behind current windfall profit tax proposals."

Report Number:
CRS In Focus, IF12064
Author:
Publisher:
Date:
2022-03-23
Copyright:
Public Domain
Retrieved From:
Congressional Research Service: https://crsreports.congress.gov/
Format:
pdf
Media Type:
application/pdf
URL:
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