US lawmakers have introduced a proposal to tax large oil companies as fuel prices rise sharply in the wake of the ongoing Iran conflict, intensifying pressure on American consumers and drawing attention to profits in the energy sector during a geopolitical crisis.
Senator Sheldon Whitehouse and Congressman Ro Khanna have reintroduced the Big Oil Windfall Profits Tax Act, citing a steep increase in petrol prices and crude oil rates in recent weeks. According to lawmakers, the price of gasoline has risen by about 80 cents per gallon since the onset of the conflict, while crude oil prices have climbed nearly 50 percent compared to levels at the start of the year.
The proposed legislation seeks to impose a tax on major oil companies producing or importing at least 300,000 barrels per day. The tax would amount to 50 percent of the difference between current oil prices and the average price recorded last year, a period when companies were already reporting strong earnings.
Lawmakers argued that the surge in prices is placing a growing burden on households, while energy firms continue to benefit from elevated market conditions. Whitehouse said consumers are facing increased costs at fuel stations as the conflict drives global oil prices higher, adding that excess profits should be redirected back to the public. He also called for a transition towards cleaner energy sources to reduce vulnerability to future price shocks.
Khanna described the conflict as both a moral and economic misstep, stating that rising fuel costs are affecting working Americans. The bill proposes that revenue generated from the tax be returned to consumers through quarterly rebates. Estimates suggest that at a crude price of $100 per barrel, the measure could generate approximately $33 billion annually, with individual taxpayers receiving modest yearly payments.
Support for the proposal has also come from advocacy groups. Representatives from environmental and policy organisations said the measure is intended to address what they describe as excess profits earned during periods of global instability. They argued that consumers often bear the cost of geopolitical disruptions, while large corporations benefit financially.
Separately, lawmaker Frank Pallone raised concerns over the volatility in oil and fuel prices, noting that gasoline costs have increased significantly since the beginning of the year. He criticised the handling of the crisis, pointing to the absence of a clear strategy to manage price fluctuations or bring stability to energy markets.
Market data reflects the impact of the conflict on fuel prices. Petrol rates in the United States have reached nearly $3.72 per gallon, marking the highest level since October 2023. Since the escalation of the conflict, prices have risen by around 74 cents, representing the sharpest monthly increase since Hurricane Katrina. Diesel prices have also surged, increasing by $1.24 to nearly $5 per gallon.
Global oil markets remain under strain, with Brent crude trading above $100 per barrel amid supply disruptions and instability in key shipping routes. The Strait of Hormuz, a critical passage for nearly one-fifth of the world’s oil supply, has been significantly affected, raising concerns about prolonged disruptions.
In response, the International Energy Agency has announced plans to release 400 million barrels from emergency reserves to stabilise supply. However, officials indicated that some of these supplies may not reach the market until later in the month, leaving consumers exposed to continued price volatility in the near term.
