The idea of a European tax on war profiteers in hydrocarbons is gaining ground

Faced with soaring prices linked to tensions around the Strait of Hormuz, several states are urging Brussels to reactivate the taxation of energy windfalls. The goal is to finance consumer assistance.

The situation is far from calming down around the Strait of Hormuz on Monday, April 13, and hydrocarbon prices – gas and oil – will remain volatile. Price increases at the pump for motorists and profits for major oil companies, exceptional gains are clearly in Brussels’ sights. This situation is reminiscent of 2022 after the invasion of Ukraine by Russia.

Shortly after the advance of Russian troops in Ukraine four years ago, Brussels introduced what was called a “temporary solidarity contribution” on producers and distributors of fossil fuels (oil, gas, and coal) whose profits had swelled due to the war. Another mechanism was implemented, targeting the excess revenues of electricity producers. For now, the European Commission has not decided to push the button, but the pressure is strong.

Several countries, including Spain, Austria, Italy, and Portugal, are calling for the swift return and implementation of levies applied from 2022. They believe that this would help finance support measures for consumers facing rising energy prices. A compensation to cope with inflation.

Europe can impose this kind of pressure, but member states are not obliged to wait for a decision from above. They can decide for themselves at the national level. The advantage of a decision coming from Brussels would be to unify the initiative and apply it immediately, without distinction, to all European producers, refiners, and energy companies. A coordinated approach deemed more effective. This possible European initiative is mentioned by Commission spokesperson Paula Pinho, but the debate is far from settled, as some countries put forward their own proposals. Germany, whose Chancellor Friedrich Merz, for example, favors the intervention of competition authorities to recover any profits made by oil companies at the expense of war.