ExxonMobil, which is headquartered in Irving, Texas, filed a lawsuit Wednesday against the European Union to block a windfall tax on oil companies’ soaring profits. File photo by Katherine Welles/Shutterstock.
Dec. 28 (UPI) — ExxonMobil is suing the European Union over the bloc’s new windfall tax on oil groups, arguing Brussels exceeded its legal authority over what the U.S. oil firm called a “counterproductive” measure.
The lawsuit, filed at the EU’s Luxembourg-based General Court on Wednesday, claims the 33% windfall tax would “undermine investor confidence, discourage investment and increase reliance on imported energy and fuel products,” according to Casey Norton, a spokesperson for Exxon.
The lawsuit also challenges the Council of the EU’s legal authority to impose the new tax, as well as its use of emergency powers to secure member states’ approval for the measure.
“Our challenge is targeted only at the counterproductive windfall profits tax, and not any other elements of the package to reduce energy prices,” ExxonMobil said in a statement.
“European industries already face a very real competitiveness crisis and governments should be supporting the production of reliable and affordable energy.”
The windfall tax, or so-called solidarity contribution agreed to in September, would require major oil, gas and coal companies to pay a “crisis contribution” on their bloated 2022 profits. The 33% tax on this year’s profits is more than 20% higher than the average for the past three years.
ExxonMobil reported a quarterly profit of close to $20 billion in October and could pay $2 billion for its share of the tax liability.
The EU’s new windfall tax could bring in as much as $136 billion from energy companies that are reporting huge profits. The money would be returned to families and businesses struggling with soaring energy costs and high inflation.
“A cap on outsize revenues will bring solidarity from energy companies with abnormally high profits towards their struggling customers,” European Commission Vice President Frans Timmermans said in September, according to the BBC.
Oil companies have seen record profits this year, due to a surge in the price of oil and natural gas following Russia’s invasion of Ukraine in February.
In October, President Joe Biden accused the companies of “war profiteering,” as he threatened to impose his own “windfall tax.”
“Oil companies’ record profits today are not because they’re doing something new or innovative. Their profits are a windfall of war.”