Countries need to tax the profits of the oil that is about to expire in order to get money out of the crisis | Renewable Energy

The last oil crisis brought a lot of pain to the people of Europe. In 2022, after Russia annexed Ukraine, gas prices skyrocketed, causing the cost of electricity to skyrocket. Every citizen of the European Union is paying more for their gas and energy sending 150 euros ($175) in the United States per year, according to a recent report by the Center for Research on Energy and Clean Air (CREA).

This pain meant unprecedented profits for the oil industry. In 2023, the global oil and gas industry generated $2.7 trillion in revenue, and invested only 4 percent of its investment in clean energy.

These are times of great injustice. Not only are people paying the price of using fossil fuels because of the climate, but they are now suffering from the growing problems of food shortages, job losses, and power outages. This declining standard of living and rising cost of living goes hand in hand with the rising profits of the fossil fuel industry.

What local governments can do at this point is to impose a fixed tax on electricity companies and use the proceeds to solve household problems and finance energy transitions.

As it was in 2022, the resurgence of high profits for the oil companies that we are seeing now has been caused by bloody conflicts. In late February, the US and Israel attacked Iran. The conflict soon spread throughout the region. So far, more than 3,000 Iranians have been killed, including more than 150 girls and teachers at the school that was hit. More than 2,000 Lebanese have also been killed, as well as 23 Israelis and many people in the Gulf region.

The closure of the Strait of Hormuz is causing a rise in oil and gas prices worldwide. Recent reports for the first quarter of the year, which includes the first month of the war, already show the benefits of hurricanes for energy companies.

Last week, BP reported a “stronger than expected” $3.2bn, much higher than the $2.63bn. Shares in the company rose 2.5 percent on the morning of the announcement. TotalEnergies also reported a 29 percent jump in first-quarter earnings to $5.4bn. ExxonMobil’s Q1 earnings were down, but that’s because some profit from sales in March will be reflected in the report for the second quarter of the year.

With experts predicting a rise in oil prices despite the recent opening of the Strait of Hormuz, these gains are expected to continue. A soon analysis from Oxfam International found that the oil industry is expected to earn $3,000 per second in 2026.

These are the environmental consequences of a global energy system dependent on extracting and transporting precious oil through narrow, insecure waterways. But it is also the result of greed and profit motive.

The fossil fuel industry has been working for decades to ensure that people are locked into this system. This goes back to efforts to deny climate change and attack alternatives that already exist 1980s. It also involves efforts to create demand for their products by persuading governments to invest in fossil fuel-based industries.

Like the power to think about Ember recently investigatedpast oil crises have failed to rid the world of a vulnerable and unreliable system. But this time, wind, solar, energy storage and electric cars are very cheap, even compared to the fossil fuel crisis of 2022.

Ember clearly points out that there is no fixed future here, and that “the temptation will be to reach for a well-known book – more drilling, more support, more diversity”. But temptations can be avoided.

The short-term sugar crash of cutting fossil fuel taxes will only transfer more money from the poor to the powerful, and those knee-jerk solutions must be replaced by much-needed relief.

The oil industry should be hit with regular taxes, and the money should be distributed to the most vulnerable people to help poor families. They should also be sent to countries most affected by climate change. Such relief would be like the compensation awarded to those who suffer from irreversible damage.

Windfall tax revenue should also be used to support fossil fuel reform to make countries less vulnerable to energy shocks. Governments should implement policies to reduce fuel demand quickly that focus on public and sustainable transport, and encourage small cars. New policies that help the most vulnerable people, such as Australia’s cheapest solar systemshould be implemented quickly.

We cannot live in this system. Dragging people to the oil that is so profitable for the industry when there is bloodshed and conflict is a sure way to cause more suffering in every way imaginable.

The views expressed in this article are those of the author and do not reflect Al Jazeera’s influence.