Energy Companies Cashing in on Ukraine War

January 4, 2023

Exxon Mobil suing EU to stop war profiteering tax.

By David Sole

The Russian Federation’s Special Military Operation into Ukraine began February 24, 2022. In response, the United States, the U.K and the European Union initiated widespread economic sanctions intending to crash the Russian economy. That result never happened, but it did result in a cut off of oil and natural gas supplies from Russia to Europe. The Nord Stream undersea pipeline from Russia to Germany was also blown up, very likely by the United States, to make sure that source of energy could not be used any more.

Since that time, energy prices have skyrocketed in Europe, and the U.K. and the United States have been selling gas and oil to them at highly inflated prices. In response, the European Union voted back in September to impose a windfall tax on energy companies and electricity providers.

According to the BBC,

“The plan includes a levy on fossil fuel firms’ surplus profits and a levy on excess revenues made from surging electricity costs…It comes as Europe braces for a difficult winter due to the cost of living crisis and squeeze on global energy supplies…Energy firms are getting much more money for their oil and gas than they were last year…because of supply concerns due to Russia’s invasion of Ukraine…EU ministers estimate that they can raise 140 billion euros from the levies on non-gas electricity producers and suppliers that are making larger than usual profits from the current demand.”

On December 22, Reuters reported that the “U.S. may become a net exporter of crude oil. The nation’s exports could exceed its imports next year for the first time since World War II.” This includes gasoline, diesel fuel and liquefied natural gas. “European refiners have snapped up U.S. grades to offset the loss of Russian oil.”

Things are looking so grim for European states that Germany announced that it had to nationalize the Uniper energy giant, the nation’s largest gas supplier. This was a bailout of the Uniper shareholders for a reported $8.4 billion immediately and an additional infusion of $27.8 billion over the next year.

Uniper, meanwhile, has brought legal action against Russia’s Gazprom “seeking billions of euros in compensation …for undelivered natural gas….Russia’s Gazprom Export confirmed that Uniper has initiated arbitration proceedings, saying, however, that it does not recognize the violation of contracts.” Interruption of Russian supplies are “due to sanctions imposed by Western countries. A section of the pipeline was subsequently blown up in September, rendering it inoperable.”

Not surprisingly, however, is the response of U.S. energy giants who are making record profits from the current situation. On December 28 it was announced that the Exxon-Mobil oil corporation filed suit in Luxemburg against the EU’s windfall profit tax. According to MSN, Exxon Mobil raked “in more that $40 billion so far this year.”

On October 31, a few days prior to the U.S. midterm elections, President Joe Biden made a fiery speech threatening similar actions against the oil profiteers. Forbes reported that “President Biden has declared war on oil companies, accusing them of ‘war profiteering’ and threatening them with new taxes on ‘excess’ profits.” Biden stated “The American people are going to judge who’s standing with them and who is only looking out for their bottom line. I know where I stand.”

Biden was looking for votes when he made these remarks. Once the elections were over not a peep has been heard about this radical proposal to punish war profiteering oil companies. The capitalist class, with the oil giants at its heart, is firmly in control of the politicians of both the Democratic and Republican parties.

The people of Europe and the U.S. continue to face crippling inflation and high energy costs. Meanwhile, tens of billions of dollars’ worth of military supplies from both sides of the Atlantic continue to flow to the Ukraine army fighting a proxy war to weaken Russia and capture the lucrative European energy market.