Taxing approach to high energy costs will backfire

A planned policy response to high energy costs is drawing criticism for potentially worsening a supply problem by punishing producers rather than addressing constraints. The article focuses on proposals in Congress that target “Big Oil” for so-called windfall profits, including a bill introduced by Sen. Sheldon Whitehouse and Rep. Ro Khanna. The Big Oil Windfall Profits Tax Act would permanently tax crude oil sales at 50% of the gap between the quarter’s average price and the 2025 average. A separate proposal by Sen. Chuck Schumer and Sen. Ron Wyden would raise the oil-and-gas stock buyback tax from 1% to 25%. The piece argues that the U.S. already effectively captures excess profits through the corporate income tax and that excise- and buyback-based approaches both deter investment. It cites European experience, saying revenue was limited while clean energy and oil production declined after similar taxes.