Proposed U.S. Windfall Oil Profit Tax as Prices Surge Amid U.S.–Iran Conflict

Oil prices have spiked since the renewal of fighting between the United States and Iran, raising gasoline costs for American consumers. An analysis by the environmental nonprofit Global Witness and *The Guardian* found that the world’s top 100 oil and gas firms earned $30 million per hour in excess profits during the early days of the conflict. The top six European oil companies alone generated at least $22 billion in the first quarter of 2026—43 % more than in the same period of 2025.

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The United Kingdom and the European Union introduced windfall profit taxes after Russia’s 2022 invasion of Ukraine, raising more than $12 billion and nearly $30 billion respectively. The United States previously enacted a windfall profit tax in 1980 following 1970s oil price shocks, but revenue fell short because companies altered transfer prices to reduce the tax burden.

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Democratic Sen. Sheldon Whitehouse of Rhode Island reintroduced a bill in March 2026 that would compare current oil prices to pre-war averages, calculate excess profits, and split the difference: half retained by companies, half placed in a fund for tax rebates to lower-income Americans. The proposal targets firms producing or importing more than 300,000 barrels per day, leaving roughly 70 % of U.S. oil production untouched. Whitehouse’s office says the design avoids the 1980 tax’s “point-of-sale” loophole by using an overall price average that individual companies cannot manipulate.

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The American Petroleum Institute (API) senior vice president Dustin Meyer argues the tax erodes investment certainty needed for U.S. energy leadership. He calls the measure “fundamentally misguided to penalize energy production, especially at this time.” API and major producers such as Chevron, ExxonMobil and Shell have not commented.

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• “That's as a direct result of oil prices spiking globally,” — Dominic Eagleton, researcher, Global Witness

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• “We're actually somewhat generous about letting [the oil companies] keep half of the excess profits,” — Sheldon Whitehouse, U.S. Senator

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• “Those profits went mainly to support families that were struggling with very high energy bills,” — Dominic Eagleton, researcher, Global Witness

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• “ It's just fundamentally misguided to penalize energy production, especially at this time, and that's exactly what this proposal does," Meyer says.” — Dustin Meyer, senior vice president, API

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• “ Wind, solar, and battery power, they're not raising their prices," Whitehouse says.” — Sheldon Whitehouse, U.S. Senator

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