Wow, wow, wow.
Earlier today, or was it last night, I suggested that any windfall profits tax will be followed by higher oil prices.
Now, that thought has been corroborated. At the linked article, go to the last paragraph.
Perhaps most important for policy makers, companies and consumers will be the reaction from industry. The reason oil markets were oversupplied and prices were low from 2015 to 2019 is because US oil companies spent all their income (and then some) to invest in the oil patch and grow production. The bill hopes to provide consumers with $120 per year in stimulus. If levying a windfall tax reduces industry's willingness to invest, consumers around the world could bear the consequences of sustained high oil prices.
Interestingly, those operators at the margin will definitely keep this production below the rate at which the 50% windfall profits tax kicks in. If an operator is producing 290,000 bopd, that operator will make sure not to produce more than 300,000 bopd.
Devon at 600,000 boepd needs to split itself into two companies, Devon East and Devon West, get each company down below 300,000 boepd.
CVX needs to exit California ASAP; offsetting California state tax will help pay the windfall profits tax.
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Death By A Thousand Cuts
I track Russia's implosion here.
Today, the US joins allies in revoking Russia's "most favored nation" trade status.
Putin, earlier this week, had already banned most imports from Russia. Between what Putin is doing to his economy and what the West is doing to his economy, Russia will become the most isolated country in the world, with the exception of North Korea. Russia has become more isolated than Iran.
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