This podcast episode explores taxing the “windfall profits” of oil and gas companies to offset skyrocketing energy prices. While five EU nations urge a new tax mechanism, previous attempts collected only €28m — far below the €190bn spent on subsidies. Ultimately, do taxes serve as a vital political signal for
Léa Marchal
Production: By Europod, in co-production with Sphera Network.
EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.
You can find the transcript here if you prefer reading:
Consumers are being squeezed by skyrocketing fuel and gas prices. Meanwhile, producers are raking in extraordinary profits.
The situation is unfair, and a few European countries are now proposing to regulate it.
Their solution? Taxing the windfall profits of oil and gas companies.
But can the EU actually implement such a tax?
On Tuesday, 7 April, oil prices hovered around 110 dollars a barrel, an 80 percent increase since early February. And drivers are feeling the pinch: diesel prices have surged by over 50 cents in just one month.
But there’s another consequence, one that affects far fewer people: windfall profits for oil and gas producers.
The term “windfall profits” comes from the idea of fruit falling from trees because of the wind -easy pickings, with no effort required.
Just like the €81m in windfall profits that oil and gas companies have been making every single day since the start of the war in the Middle East, according to Greenpeace Germany.
The NGO is calling for a tax on these profits. And they’re not alone.
Five European countries – Germany, Italy, Spain, Portugal, and Austria – have urged the European Commission to set up a mechanism to tax these windfall profits.
Can the EU do it?
The commission confirmed the reception of the letter from the five member states on Tuesday and is now looking into the matter, according to a spokesperson.
So, what’s next? The commission could allow the 27 EU countries to introduce a windfall tax – but it can’t force them to do so.
Back in 2022, after Russia’s invasion of Ukraine, the commission introduced an emergency measure allowing EU countries to tax oil and gas companies’ profits beyond a certain threshold – for two years.
Here’s how it worked: If a company’s profits in 2022 and 2023 exceeded 20 percent of their average revenue over the past four years, those excess profits could be taxed.
16 EU countries used this tool. Eight others introduced similar national measures. The remaining three had no companies affected, so nothing to tax.
In total, €28m was collected. That money went toward supporting consumers during those two years.
Was it enough?
No.
Because the various support measures introduced by EU countries to help households and businesses cost €190bn in 2022 alone, according to the commission.
That’s a far cry from the €28m collected through the windfall tax.
But it’s still €28m less in public spending, and it restores a certain sense of fairness — between those profiting from the war and those paying its indirect costs.
The catch? Member states have to actually want to tax their own companies.
Taxing windfall profits isn’t a magic solution, but it does send a political signal to consumers — and it helps reduce public spending.
The magic solution would be to cap oil and gas prices everywhere, but that would require an international agreement — which is pretty much impossible to achieve.
For now, it’s up to national authorities to take the steps they believe will best ease the impact of this crisis.
