In the United States, the national average price of a gallon of gas is $4.19, up from $2.90 a year ago. This significant increase has legislators looking for ways to mitigate the pain at the pump.
Numerous proposals have been made to provide direct stimulus payments in response to high gasoline prices. One of these, dubbed the Big Oil Windfall Profits Tax, would impose those payments on major oil companies.
The bill, introduced by Democratic Reps. Ro Khanna of California and Sheldon Whitehouse of Rhode Island, would impose a per-barrel tax on major oil companies “equal to 50% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019,” according to the bill.
According to Khanna, at $120 per barrel of oil, the tax would generate approximately $45 billion per year. This equates to a $240 annual payment for single filers and a $360 annual payment for joint filers.
“Smaller companies accounting for roughly 70% of domestic production will be exempt, ensuring that oil giants like Exxon Mobil and Chevron cannot continue to raise prices without risking losing market share,” the lawmakers said in a statement.
The tax levy is not the only proposed gas-related stimulus measure. Representatives Mike Thompson (D-California), John Larson (D-Connecticut), and Lauren Underwood (D-Illinois) introduced the Gas Rebate Act of 2022, which would provide $100 per month for adults and $100 per dependent for the remainder of 2022 for any month in which the national average gas price exceeds $4 a gallon.
The plan and eligibility criteria are modeled after previous stimulus checks used to jumpstart the economy in the aftermath of the COVID-19 pandemic. As with the earlier stimulus payments, the gas money would be distributed to single filers earning less than $75,000 per year, gradually phased out for those earning more than $80,000. Payments would be made to joint filers earning less than $150,000, phasing out at $160,000.
Rep. Peter DeFazio, D-Oregon, introduced a third proposal that would also create a rebate based on oil company profits. The Stop Gas Price Gouging Tax and Rebate Act would fund payments by taxing current year’s oil and gas profits. The exact amount of the payments is unknown.