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[deleted] t1_j21hqi5 wrote

Reply to comment by Rooooben in Exxon sues EU in move to block new windfall tax on oil companies by davetowers646

>The idea that they kept pricing artificially high in the name of recovering past lost profits is nuts

They don't. They are price takers; not price makers. They world market prices hydrocarbons, and the producers sell into that market. What windfall profits taxes do is reduce exploration budgets, because energy companies budget for the amount of exploration that makes sense given the expected energy prices over an entire economic cycle. If we cap the profits during the good times and they take losses and break even years during the bad times, then they will reduce exploration budgets and we will have less oil during the next energy cycle.

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Rooooben t1_j21o2kn wrote

70% of US gasoline is sold in the US, and before Obama it was 100%; the world pricing is on oil, which is just as low as it’s always been, except gas is priced higher, giving a wider margin than ever before. Did they not have oil exploration in 2019? Why do we have a 10-20 percent margin up until the pandemic, now we are in 40-50% range?

Also, oil exploration isn’t really a thing these days -97% of oil is coming from existing fields using new tech, like shale. They don’t spend money to find it, they already own and know where it all is.

What they will really do with the profit is the same that every major corporation has done - pay it out via dividends and stock buy-backs, increasing shareholder value, not spend on the business, because that extra money isn’t needed - their margins are great without spending a dime extra.

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