The conflict in Iran and Middle East is a devastating geopolitical crisis caused by Trump and Netanyahu. It is also a massive, ongoing transfer of wealth from everyday citizens directly into the pockets of multinational fossil fuel companies and the billionaire elites that own them.

This is petro-imperialism at work.

Foreign imperial intervention in the Middle East has always been about controlling the global oil supply. Whoever controls the flow of oil has substantial controls over the entire global economy. This is why the US (and UK before) is so invested in the Gulf states.

The current oil crisis centres on the Strait of Hormuz. This narrow chokepoint normally carries one-fifth of the world’s daily oil and gas supplies. The closure of the Strait by Iran in response to the US and Israeli attacks has brought oil and gas prices soaring.

While consumers suffer, fossil fuel giants treat global conflict like the winning lottery ticket. Analysts estimate that US oil groups alone are in line for a unimaginable $90 billion windfall this year simply because of the increase in global oil commodity prices.

The fallout is impacting Australia despite the fact that we export the bulk of the oil and gas we produce — this means we dig up and export far, far more oil and gas than we import and use.

Everyday people are paying more for petrol, while farmers are running low on diesel, which impacts food prices. The cost increase is due to multi-national US-owned oil companies, who have decided to restrict supply in Australia, and are refusing to release fuel to independent petrol/diesel wholesalers.

Australia is one of the largest three gas exporters in the world. Despite this, Australian citizens see almost no benefit from these price spikes — and in fact we end up paying the global “spot price”.

Oil prices are set on speculative ‘futures markets’ where paper barrels trade hands many times among financial gamblers rather than real businesses.

In 2022, oil prices spiked to $130 U.S./barrel, not due to shortages, but because traders profited from fear and uncertainty after Russia’s invasion of Ukraine. Global oil supply grew, and Canada’s oil output reached record levels, yet consumer prices soared.

Via False Profits

The price in gas has increased since the US and Israel attacked Iran by 50 percent, so this means for example that $1 billion in gas before the war is now sold for $1.5 billion — but Woodside, Chevron, Shell, Inpex and Santos have not done anything to earn that $500,000,000 in extra revenue.

Our tax system for oil and gas has been written to almost entirely benefit the foreign-owned mega-corporations. Two-thirds of our gas is sent offshore completely tax-free. In a single recent year, Australia exported $86 billion worth of gas. We collected only $1.9 billion from the Petroleum Resource Rent Tax. Effectively Australia gave away $84.1 billion worth of gas, almost entirely to foreign-owned fossil fuel companies.

This wealth give-away is because because of the Petroleum Resource Rent Taxes (PRRT), a tax that does not properly tax gas exports and therefore lets foreign multinationals war-profiteer while Australians face rising interest rates and living costs.

This means that everyday workers pay more tax on beer than the gas cartels paid in tax on the gas that Australia owns.

There is a clear solution to this profiteering. Peak bodies, NGOs and unions are calling for the broken tax system to be replaced with a 25 percent export levy on liquefied natural gas, which could capture tens of billions of dollars to provide immediate cost-of-living relief.

When global energy prices surge, gas exporters can earn unusually large profits. Economists often call these “windfall gains” or “scarcity rents“. These profits arise not because companies become more productive or innovative, but from global energy price shocks.

Because much of Australia’s gas industry is foreign-owned, a significant share of these gains flows overseas. A temporary levy on windfall profits during energy shocks could capture part of these gains and redirect them to support households facing higher energy costs, without weakening the federal budget.

Amid a surge in energy prices, a windfall tax on gas profits could be the best way to protect households, The Conversation

While some may call the fact that oil and gas companies pay almost no tax “a loophole”, it is in fact the deliberate policy choices over decades by state and federal governments to prioritise the privilege and mobility of capital over the stability of Australia’s economy or society.

We are stuck in a dangerous, immoral and deeply corrosive situation where the very corporations that profit most from war are the ones with the least incentive to see it end.

The fossil fuel profiteering highlights the “irrational rationality” of our neoliberal economic system. It is “rational” for these mega-corporations to maximise profit during a war, but “irrational” for a society to allow its own impoverishment to facilitate it.

Remarkably, our current Australian political discourse and the mainstream media wants to keep the public focused on “cost-of-living relief” (like cutting the fuel tax) rather than questioning why foreign corporations own and profit from Australia’s gas and oil!

These massive fossil fuel companies operate with impunity from political and democratic consequences because they are structurally embedded within and essential to the global US imperial extraction economy.

This isn’t a cost-of-living issue — we need to see it for what it really is: profit-caused inflation, directly caused by the profiteering and price gouging of oil and gas companies exploiting the war.

Why should Australians continue to quietly subsidise the war profiteering of multinational gas companies? It is time to demand an ultra-profits windfall tax.

(NB: Obviously the war and oil price rises seriously impacts people in almost every other nation on earth as well.)