A Windfall Profits Tax on Oil Companies to Finance R&D in Non-Fossil Based Energy

The Intergovernmental Panel on Climate Change reports that global warming is "unequivocal" and that human activity is the main driver. The United States, with five percent of the world’s population, contributes about a quarter of greenhouse gas emissions, far more than other country. But you can forget a carbon tax any time soon. Dems don’t have the intestinal fortitude to propose it.

That leaves the only plausible policy right now the development of non-fossil based fuels. Yet there’s no money in the public kitty for this or much else. Bush’s new budget allows only a pittance for new research in solar, biomass, wind, and other alternatives.

So where to get the money? From the revenues we’ve been handing oil companies. Exxon Mobil just reported an annual profit of $39.5 billion for 2006, its second consecutive record and the largest profit reported by any American company in history. Other oil companies are also swimming in cash. Oil prices are rebounding now that cold weather has returned to most of the nation.

The Dems should propose a temporary windfall profits tax on oil companies (temporary, that is, until the oil company’s current oil earnings boom falls back to a normal range), the proceeds of which go into a fund to finance R&D in non-fossil based fuels. Market fundamentalists who holler that oil companies should be allowed to reinvest their profits in new oil exploration aren’t paying attention to the environmental costs. But the windfall tax should be designed so that, to the extent oil companies do wish to invest in non-fossil based fuels, such profits are exempt.