Gas prices in California are consistently higher than the rest of the country, thanks to state taxes, a cleaner fuel blend, an isolated gas refining market and more. But in September, California prices jumped even higher and that gap grew wider.
After the tax was imposed, however, drilling decreased and the amount oil companies invested in developing new oil dropped, according to the Alaska Journal of Commerce. But, Brunori said, it wasn’t really a windfall profit tax because it wasn’t a direct tax on profits. It’s also not clear whether Newsom’s proposal will look anything like Alaska’s tax.
But, because the taxes were complicated, well-paid attorneys at large companies could use “creative gamesmanship” to reduce their employers’ tax bill, while small companies without a phalanx of lawyers shouldered more of the burden, said Joe Thorndike, director of the Tax History Project at Tax Analysts.
As energy prices have spiked in Europe and the United Kingdom, leaders there have also turned to windfall taxes. Greece, Hungary, Italy, Romania, Spain and the U.K. have all implemented their own, and six other countries have shown intentions to impose similar taxes, according to a September analysis by the Tax Foundation. In late September, the European Union agreed to a windfall tax on oil and gas profits.