Irish Examiner view: Strong case for windfall taxes on energy companies

Fuel prices have escalated massively in recent months

Filling up should become cheaper if the savings are passed on to the consumer.

The cost of fuel should be decreasing in the month ahead as international prices for petrol and diesel have finally begun to come down. To which many motorists might respond, “yeah, right”.

The AA says the trajectory of wholesale prices is moving south. In June it reported petrol was 41% more expensive than last year and 66% more expensive than 2020 while the cost of diesel was 45% higher than 2021. Wholesale petrol peaked above €1.17 a litre on June 1 but fell below 94c a litre for much of last week. So, filling up should become cheaper, if the trade is prepared to pass savings on.

Most free marketeers do not like the concept of windfall taxes on energy companies, and the companies themselves claim they are a disincentive to research and exploration. But the huge profits they are now enjoying are a consequence of demand released after the pandemic, and of Vladimir Putin’s murderous war on Ukraine, both hugely escalating prices.

Nobel prize-winning economist Joseph Stiglitz described a windfall profits tax as a “no-brainer”.

“It’s not as if the energy companies did anything to deserve it. It was Putin who engaged in that reckless action. Why should the energy companies be rewarded?” he asked.

And, perhaps, such a tax should be expanded, to include those companies controlling the forecourt, as a salutary exercise to remind them they too could be heavily taxed for failing to pass on benefits of the lower prices to at the petrol pump.