Democrats urge windfall tax as big oil set to make billions from Iran war | US politics

As major oil companies stand to reap billions of dollars in profits from the war in Iran, Democratic lawmakers and progressive groups are calling for a windfall tax on major fossil fuel companies.

US-Israeli attacks on Iran have triggered the largest ever disruption in fuel supplies. accordingly The International Energy Agency reported that crude oil costs have risen above $100 per barrel in recent days. These high prices have hit US wallets, and average domestic gas prices have peaked $3.70 per gallonand Americans spent more than $2 billion filling their tanks in the last two weeks. a guess.

While ordinary people struggle, corporations reap windfall profits. Since the war began last month, the share prices of US oil giants ExxonMobil and Chevron have risen by more than 5% and 7% respectively, while their market values ​​have also risen.

As oil prices continue to rise, Rhode Island senator Whitehouse and California congressman Ro Khanna have proposed taxing the windfall profits major oil companies make from the crisis caused by the Iran war.

“Trump’s chosen war in Iran is not only a moral mistake, it is also an economic blunder that has caused gas prices to skyrocket for working Americans,” Khanna said in a statement.

The Guardian contacted the American Petroleum Institute, the largest US oil lobby group, for comment.

Hours before the bill was released, dozens of consumer and environmental advocacy organizations sent a formal letter to Congress supporting such a proposal.

“Revenues from the windfall profits tax should be returned directly to struggling American households to help offset rising costs,” he says letterAgreement signed by Pay Polluters campaign, Sierra Club, Public Citizen and more than 70 other state and national groups.

Supporters say now is the time to implement the tax. If oil prices remain at their current level, gas prices will also fall. keep rising US fossil fuel firms could raise an additional $60 billion this year, while consulting firm Rystad Energy and investment bank Jeffries to show.

“Energy producers and commodity traders are taking advantage of the volatility in energy prices,” Isabella Weber, an economics professor at the University of Massachusetts Amherst, told the Guardian last week. He said windfall taxes “could raise money to protect more vulnerable segments of society from cost-of-living pressures.”

Although the United States has not imposed a windfall tax on oil companies since the 1980s, the industry has profited from various fuel crises since then. Oil companies made historic profits after Russia invaded Ukraine in 2022; Profits in a 2025 study co-authored by Weber were 13% higher than the total investment in the U.S. green energy transition that year.

Donald Trump insisted that such excessive profits benefit ordinary Americans.

“The United States is by far the largest oil producer in the world, so we make a lot of money when oil prices go up,” Trump said on Truth Social. last week.

According to another 2025 analysis co-authored by Weber, this post only applies if Trump means rich people by “we.” Oil companies’ profits flow to those who own their shares, either directly or through pension funds, retirement funds or other investments. These people are generally prosperous, study found.

During the 2022 fuel crisis triggered by Russia’s war against Ukraine, 50% of the profits of US oil and gas companies went to the richest 1%, while the bottom 50% received only 1% of the profits.

“Record profits for energy firms mean record revenue for them because stock ownership is in the hands of the wealthiest people in our societies,” Weber said. “The evidence clearly shows that increases in energy prices are further increasing inequality in our societies.”

Weber said a windfall tax could help “contain inequality and raise money to protect more vulnerable segments of society from cost-of-living pressures.”

In their letter to congressional leaders on Tuesday, supporters cited a University of Massachusetts Amherst study that found about $1,715 could be refunded to each American household if a similar tax were enacted during the 2022 price shock.

“Other countries have already shown that this approach works,” the letter says, noting that following the 2022 fuel shock, the UK imposed a windfall tax on oil and gas companies, collecting $3.3 billion in its first year and $4.5 billion in the following year.

Khanna and Whitehouse had previously proposed a windfall profit tax during the 2022 energy crisis. A survey at the time showed: about 80% A majority of Americans supported this move.

“A windfall profits tax is extremely popular,” said Jamie Henn, director of Fossil Free Media, an anti-oil and gas nonprofit that has helped organize support for the current and previous proposals. “The only reason Congress can’t pass legislation is because too many politicians are bought and paid by big oil companies.”

Ultimately, the United States must quickly “move toward a managed transition away from volatile fossil fuels,” said Collin Rees, U.S. policy director for climate research and advocacy nonprofit Oil Change International, which signed Tuesday’s letter supporting a windfall tax.

“This could have huge potential benefits in reducing conflict and ending deadly US wars for oil,” he said. “Meanwhile, we need to stop oil billionaires from profiteering.”