Russia’s senseless invasion of Ukraine is a big loss for human rights, democracy in eastern Europe, global political stability and the fight against climate change.
But one big winner is big oil. When Europe and North America stopped imports of Russian natural gas and oil, prices at the pump skyrocketed. On Vancouver Island, they neared $2/litre.
Oil execs are laughing their way to the bank. This war-induced price spike comes after Canadian Natural Resources rebounded from the pandemic slump in 2020 to post a record profit of $7.7 billion last year. In 2021 Suncor also recorded a near-record $4 billion profit.
Call it what you will, but the surge in pump prices being felt around the world amounts to nothing less than wartime profiteering.
That’s why the Canadian Centre for Policy Alternatives (CCPA) is calling for a windfall tax on the oil and gas sector.
“Ideally, the tax would be national, and revenues redistributed back to households, as transfers to those with low to medium incomes, or be used to support reductions in transit fares and investments that move us off fossil fuels,” wrote Marc Lee, senior economist for the CCPA, in an editorial.
Economists consider windfall profits a form of economic rent. It’s the profit made simply through ownership rather than income made from “new productive investments in capital equipment or hiring people,” explains Lee.
Basically, it’s easy money.
And the CCPA isn’t the only one pushing for a windfall tax.
The NDP tabled a motion in Parliament calling on Trudeau’s government to impose a special 3 percent tax on big oil, banks and insurances companies with profits of over $1 Billion.
Democrats in the United States Congress are calling for a 50 percent tax per barrel on the difference between current oil prices and the average 2015 to 2019 price of $66 per barrel.
In the UK, calls are being renewed for a windfall tax on North Sea oil and gas companies.
And some countries aren’t just talking; they’re acting.
Italy just imposed a windfall profit tax of 10 percent on some energy companies to finance new programs that protect consumers and businesses from soaring oil prices.
In the past, governments have stepped in to prevent profiteering during wartime. For example, in 1997, the British government enacted a windfall tax on what they dubbed excessive profits of privatized utilities.
So why not now, in Canada?
Remember, oil and gas reserves are a public resource in Canada. Extracting them is a privilege that should come with an obligation on oil companies to pay a fair price in taxes and royalties.
Some terrible ideas are flowing from the war in Ukraine.
For example, Alberta Premier Jason Kenney, true to form, is using this humanitarian crisis to shamelessly plug for new pipelines. Other oil industry hacks are calling for the freeing up of more oil resources and expedited exploration and drilling. UK Prime Minister Boris Johnson, after swearing off Russian oil and gas, has had to swallow his pride and cozy up to Saudi Arabia, a country that recently conducted a mass execution of 81 prisoners, many of them political dissidents.
But, if there’s one upside from these troubling times, it’s an opportunity to shift our dependency away from fossil fuels – for good.
A windfall tax is one way that we could take the pain off ordinary citizens and channel some of the oil and gas industry’s massive profits toward more clean energy development.
It’s time.
