Wood Mackenzie estimates the global oil and gas industry will collect a $495 billion cash windfall in 2026, profit that did not exist in forecasts before the U.S.-Israel war with Iran began. Chevron posted its highest quarterly earnings in six years on July 31. President Trump has since said the companies are “making too much money,” and three separate bills targeting those profits are now moving through Congress.
The 1980s precedent
The last U.S. attempt offers a cautionary benchmark. The Crude Oil Windfall Profit Tax of 1980 was projected to raise $393 billion over a decade. It delivered roughly $80 billion before Congress repealed it in 1988, about one-fifth of the forecast. Prices collapsed after 1986, exemptions for domestic output expanded, and revenue had dwindled to near zero by the end.
Three bills, three designs
None of the current proposals mirror the textbook model, which would tax only profits above a baseline that includes all costs plus a normal return. Australia’s Petroleum Resource Rent Tax and Norway’s special petroleum tax operate that way. The Whitehouse-Khanna bill instead applies a 50% excise per barrel on the spread between the current Brent average and the 2025 average of $69. At July’s $84 average, that equals $7.50 per barrel, untethered from any company’s actual costs or margins. The Sherman bill goes further: a 100% levy on every dollar above $75 per barrel, or $9 at the July average, expiring only when hostilities cease and prices retreat. The Wyden-Schumer-Bennet measure sidesteps the wellhead entirely, lifting the buyback excise for large producers from 1% to 25%.
International parallels
The United Kingdom’s layered North Sea regime, now at a combined 78% rate, is on track to yield £8 billion ($10.8 billion) this year, roughly double the prior period. A one-time EU levy imposed after Russia’s 2022 invasion raised €26.15 billion ($30 billion); five member states are now pushing for a repeat.
The investment argument
The American Petroleum Institute contends the proposals “erode the certainty needed to make investment decisions.” The Tax Foundation has not yet published its analysis.