The open conflict that erupted in the Middle East last February is sending shockwaves around the world, driving up fossil-fuel prices. Riding the crisis, oil companies could reap substantial windfall profits.
According to an analysis by the organization Transport & Environment (T&E), the major oil companies could reap around €24 billion in windfall profits from drivers in the European Union by the end of the year.
So far, fossil-fuel companies have already recorded windfall profits of €1.3 billion, according to the same study.
T&E calls on European leaders to implement a fiscal regime — similar to what happened in 2022 with energy shocks caused by Russia’s invasion of Ukraine — on what they describe as “excess profits” of the oil majors and to use the funds thus raised to make EU citizens less vulnerable to future oil shocks.
“Once again, drivers’ pain is the gain of the oil companies,” says Daniel Quiggin, senior policy advisor at T&E.
The oil majors, the expert argues, “have every reason to keep Europeans dependent on fossil fuels, since they are the ones who benefit from price spikes.” Thus, “the EU should reinstate its windfall profits tax and invest the revenues in electrification and renewable energy, which will eventually break this cycle,” he contends.
Estimates by T&E point out that as of 23 March, average pump prices in the European Union stood at €2.06 per litre of diesel and €1.89 per litre of petrol, corresponding to increases of €0.49 and €0.27, respectively, compared with the period before the conflict.
“Filling a 55-litre diesel tank now costs almost €27 more than it did before the conflict began, and €15 more for a petrol car,” the organization calculates.
