https://www.wsj.com/articles/energy-policy-for-dummies-windfall-tax-oil-companies-joe-biden-11667339340
President Biden has the worst energy policy since Jimmy Carter, so it was probably inevitable that he would disinter one of Mr. Carter’s worst ideas—a “windfall profits” tax on oil companies. Doesn’t he know that when you tax something, you get less of it?
Sorry, rhetorical question. “Their profits are a windfall of war—the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe,” Mr. Biden said Monday of oil companies reporting strong earnings this year.
The reality is that their profits owe more to his Administration’s war on fossil fuels than Vladimir Putin’s Ukraine invasion. Oil prices surged at the start of the war amid uncertainty about the impact of Western sanctions on Russian supply. But prices have moderated as China and India have continued to buy Russian crude at a discount, while markets have downgraded global economic forecasts amid central-bank tightening and Chinese lockdowns.
But gasoline prices remain relatively elevated because production, especially in the U.S., isn’t keeping up with demand. Recent refinery shutdowns in the U.S. and Europe have created a supply bottleneck, boosting refiners’ normally narrow margins. It’s no small irony that government policies and investor pressure to reduce production have inflated Big Oil’s profits.