Calls Grow for Windfall Tax on Oil Profits Amid Iran War Crisis

As oil prices surge past $100 a barrel amid the ongoing U.S.-Israeli war with Iran, oil and gas companies are reporting massive windfall profits — and a growing coalition of Democratic lawmakers is demanding that a significant portion of that money be returned to American households. The debate, now intensifying on Capitol Hill, pits energy industry profits against consumer pain at the pump and raises fundamental questions about who benefits from wartime price spikes.

The Scale of the Windfall

The world’s top 100 oil and gas firms made $30 million every hour in excess profits during the early days of the conflict, according to an analysis by Global Witness and The Guardian. The top six European oil companies alone earned at least $22 billion in the first quarter of 2026 — 43% higher than their profits in the same period last year. Meanwhile, U.S. oil giants ExxonMobil and Chevron saw their share prices climb 5% and 7% respectively since the war began.

“That’s as a direct result of oil prices spiking globally,” said Dominic Eagleton, who researches fossil fuels at Global Witness, in comments reported by NPR.

The price surge has hit American consumers hard. Average U.S. gas prices topped $3.70 per gallon following the onset of war, with Americans spending more than an additional $2 billion to fill their tanks in the first two weeks alone.

The Big Oil Windfall Profits Tax Act

In response, Sen. Sheldon Whitehouse (D-RI) and Rep. Ro Khanna (D-CA) have reintroduced the Big Oil Windfall Profits Tax Act. The legislation would impose a per-barrel tax equal to 50% of the difference between the current quarter’s average oil price and the 2025 average price. Critically, the tax applies only to companies producing or importing more than 300,000 barrels per day, leaving about 70% of U.S. oil production untouched.

“We’re actually somewhat generous about letting [the oil companies] keep half of the excess profits,” Whitehouse told NPR, “but we want at least half of it to go back.”

Revenue from the tax would be returned to lower- and middle-income Americans through quarterly rebates. At $100 per barrel of oil, the levy would raise approximately $33 billion per year, with single filers receiving roughly $216 annually and joint filers about $324 annually. The rebates would phase out for single filers earning above $75,000 and joint filers above $150,000.

“Trump’s war of choice in Iran is not just a moral mistake but an economic blunder that is skyrocketing gas prices for working Americans,” Khanna said in a statement.

Industry Opposition and Historical Precedent

The oil industry has pushed back forcefully. Dustin Meyer, senior vice president at the American Petroleum Institute, argued the tax would undermine investment certainty.

“For investment in any industry, you need certainty,” Meyer told NPR. “And proposals like this erode exactly the sort of certainty that is needed to make the investment that has brought the United States to such an unparalleled position of American energy leadership.”

Conservative analysts have also raised concerns. Kyle Pomerleau of the American Enterprise Institute argued that the proposals are “windfall profits taxes in name only,” functioning instead as excise taxes that could discourage investment. The Tax Foundation similarly warned that taxing producers is the “opposite of a solution to a supply crisis.”

Proponents point to successful international precedents. The United Kingdom’s windfall oil tax, enacted after Russia’s 2022 invasion of Ukraine, raised more than $12 billion through fiscal year 2025. The European Union’s temporary windfall tax raised nearly $30 billion over two years, with proceeds supporting households struggling with high energy bills. In April, finance ministers from Austria, Germany, Italy, Portugal, and Spain called for another EU windfall tax.

The U.S. has attempted this before. The Crude Oil Windfall Profit Tax Act of 1980 raised less revenue than projected, largely because oil prices collapsed in the mid-1980s and vertically integrated companies manipulated transfer prices. Whitehouse’s office says the new proposal avoids these pitfalls by using average oil prices that individual companies cannot manipulate and by covering both domestic production and imports.

The Inequality Dimension

Research by University of Massachusetts Amherst economist Isabella Weber found that during the 2022 fuel crisis, 50% of U.S. oil and gas profits went to the wealthiest 1% of individuals, while the bottom 50% obtained just 1% of those profits. Oil company profits in 2022 were 13% higher than total U.S. investment in green energy that year.

“Since stock ownership is so heavily skewed towards the richest people in our societies, record profits for energy firms means record income for them,” Weber told The Guardian. “The evidence clearly shows that surges in energy prices exacerbate inequality in our societies.”

Political Prospects

About a dozen senators have signed onto Whitehouse’s bill — all Democrats along with Independent Bernie Sanders. Whitehouse acknowledges it will be “an uphill struggle” to pass, particularly with President Donald Trump opposing the measure. Trump posted on Truth Social that “when oil prices go up, we make a lot of money,” arguing that high prices benefit the U.S. as the world’s largest oil producer.

A 2022 nationwide poll found 80% of Americans support a windfall profits tax on oil companies. “A windfall profits tax is overwhelmingly popular,” said Jamie Henn, director of Fossil Free Media. “The only reason Congress won’t pass it is because too many politicians are bought and paid for by big oil.”

What to Watch

With oil prices potentially rising further — Qatar has warned they could surpass $150 per barrel — the pressure on lawmakers is likely to intensify. The debate also touches on the broader energy transition, with Whitehouse noting that “wind, solar, and battery power — they’re not raising their prices.” As the Iran war continues to reshape global energy markets, the question of who bears the cost and who reaps the rewards is far from settled.