Since the war began, oil prices have increased while production costs have remained relatively stable, the American Petroleum Institute reports. Some U.S. lawmakers propose taxing the windfall profits of oil companies.
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Brandon Bell/Getty Images North America
Oil prices have climbed amid renewed tensions between the U.S. and Iran, leading to higher gasoline costs for American consumers.
This situation has been profitable for oil and gas companies.
The top 100 oil and gas firms worldwide generated $30 million in excess profits every hour during the early stages of the U.S.-Israeli conflict with Iran, according to an analysis by Global Witness and the Guardian.
Dominic Eagleton of Global Witness attributes this directly to the global surge in oil prices.
The American Petroleum Institute notes that the cost of producing oil has remained largely unchanged since the war’s onset, resulting in windfall profits for many oil companies.
Global Witness reports that the top six European oil companies earned at least $22 billion in the first quarter of 2026, a 43% increase over the same period in 2025.
In response to Russia’s invasion of Ukraine in 2022, the U.K. and the European Union implemented windfall taxes on oil profits, which continue in the U.K. Some U.S. lawmakers now seek to introduce similar taxes domestically.
Sen. Sheldon Whitehouse of Rhode Island has proposed a windfall oil profit tax earlier this year.
Whitehouse states, “We’re actually somewhat generous about letting [the oil companies] keep half of the excess profits, but we want at least half of it to go back.”
The U.S. oil industry, represented by Dustin Meyer of the American Petroleum Institute, generally opposes this tax proposal.
Meyer explains, “For investment in any industry, you need certainty. 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.”
Here’s an overview of the proposed windfall oil tax in the U.S.
Early in the Iran war, companies were found to be making $30 million per hour in excess profits, as noted by Dominic Eagleton from Global Witness.
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How would the proposed windfall profit oil tax work?
According to Whitehouse, the tax would compare the current price spikes to pre-war oil prices. The difference in profits on those barrels would then be assessed, with oil companies retaining half of the excess profits, while the rest would be redistributed to lower-income Americans via tax rebates.
Whitehouse and Rep. Ro Khanna of California originally introduced a similar tax in 2022 and reintroduced it this March.
How do windfall taxes work in the U.K. and elsewhere?
The U.K.’s windfall tax, initiated after Russia’s Ukraine invasion, targets domestic oil and gas production, raising over $12 billion by the end of the 2025 fiscal year. Similarly, the European Union’s temporary windfall tax collected nearly $30 billion over two years, primarily assisting families with high energy bills.
