Both the United States and the United Kingdom have imposed windfall taxes in the past with broad political support. But this time around, support has been mostly limited to liberal parties in both countries.
In Washington, Democratic supporters of a windfall tax argue it’s the only fair way to help people who can’t afford to drive or heat their homes.
“We need to rein in Big Oil’s profits and relieve Americans at the gas pump – that starts with making sure these companies pay a price when they price-gouge,” said Sen. Elizabeth Warren, one of of the 12 co-sponsors of the measure. in the Senate.
Britain’s opposition Labor Party is calling for taxes on profits made by North Sea oil and gas companies to be increased for a year to help pay for various financial relief measures. The US bill would tax profits made by big oil companies on crude prices above recent historical levels. It would pay hundreds of dollars a year to low- and middle-income taxpayers.
But that assumes average oil prices of $120 a barrel — and prices topped that level two weeks ago. Although prices have since fallen, it highlights the challenge of drafting legislation around a volatile commodity market. Brent oil closed Friday at just under $108. Retail gasoline prices fell slightly, although at a much slower pace than oil prices.
The US bill taxes profits that big oil companies make on crude prices above recent historic levels. But that assumes average oil prices of $120 a barrel. Prices broke above this level two weeks ago, but have since fallen back.
But the Biden administration has yet to voice support for the windfall tax proposal, and the Senate doesn’t have enough votes to pass it, argued chief strategy strategist Greg Valliere. American policy for AGF Investments.
US and UK oil industry trade groups argue that the windfall tax proposals would run counter to calls for increased domestic production in those countries to compensate for the loss of Russian crude oil.
“Legislators should focus on policies that increase U.S. supply to help alleviate the situation rather than political grandstanding that only discourages investment at a time when it is most needed,” Frank Macchiarola said. , senior vice president of policy, economics, and regulatory affairs for the American Petroleum Institute.
Deirdre Michie, CEO of Offshore Energies UK, says a windfall profit would prompt oil companies to further cut investment in oil production, “just when we need our own oil and gas supplies the most. “, said Michie.
But oil companies have not been particularly eager to invest in more production in the United States or the United Kingdom.
“Oil and gas companies don’t want to drill anymore,” Raymond James analyst Pavel Molchanov said recently. “They’re under pressure from the financial community to pay more dividends, to do more share buybacks instead of the proverbial ‘drill baby drill’ like they would have done 10 years ago. The business strategy has fundamentally changed.”
Still, Molchanov said the proposals for a windfall tax are “political posturing, pure and simple, at a time when consumers are unhappy with high fuel prices,” adding that “the micromanagement of taxation based on short-term price fluctuations, whether up or down, is counterproductive.” he argued.
The sprawling billion-dollar palace that sits on a hill overlooking the Black Sea is seen by some Kremlin critics as the ultimate emblem of Russian President Vladimir Putin’s corrupt legacy.
Dubbed “Putin’s Palace,” the 190,000-square-foot mega-mansion was reportedly built for his personal use with funds from billionaire oligarchs, whom he allowed to thrive in Russia’s notoriously corrupt economy as long as they shared the wealth – with him.
The property has its own amphitheater, an underground hockey rink and a private seaport, according to a documentary produced by jailed Russian opposition leader Alexey Navalny’s anti-corruption group. There is a no-fly zone in the skies above and a no-sail zone in the surrounding waters.
The magnificent fortress contrasts sharply with the tiny 800 square foot apartment claimed by Putin in his official 2020 financial disclosure.
Yet despite the opulence of the hilltop retreat, “I would be very surprised if Putin set foot there again,” Nate Sibley, a Russian corruption expert who advises members of Congress, told CNN.
Sibley said the palace symbolized what he sees as a bygone era of Putin pursuing, thanks to the wealth of the oligarchs, a luxurious lifestyle he could never afford on his government salary.
While Putin would have amassed a hidden fortune through such means earlier in his career, Sibley said, he has since become less dependent on his wealthy benefactors over the years and has instead surrounded himself with government and government loyalists. army who share his radical nationalist views. .
The shift, some Russian experts told CNN, could make it harder for Putin to personally feel the sting of the economic sanctions the United States and its European allies imposed to punish him for invading Ukraine.
Putin positioned himself, as Sibley puts it, “above the fray”.
Monday: Profits from Nike and Tencent Music; Payment of Russian bond due
Tuesday: Gains from Carnival and Adobe
Wednesday: sales of new homes in the United States; EIA Crude Oil Inventories; Profits from General Mills and KB Home
Thusday: US unemployment claims; Earnings from Darden Restaurants and NIO; IEA meeting in Paris with US Secretary of Energy