EU faces renewed debate over oil excess profits amid price surge

Rising fuel costs across Europe are once again putting pressure on policymakers, as a fresh analysis highlights the financial gains accruing to oil majors during geopolitical instability. A new tracker from Transport & Environment (T&E) points to significant profit increases linked to recent tensions in the Middle East.

For eeNews Europe readers and industry stakeholders, the development underscores how energy price volatility can influence both mobility costs and the broader transition toward electrification and alternative energy systems.

Calls to revive windfall tax mechanism

According to T&E, oil companies could generate around €24 billion in additional profits from European drivers this year. The group attributes the increase to higher oil prices following the US-Israeli attack on Iran in late February, which has pushed EU fuel prices sharply upward.

Daniel Quiggin, senior policy advisor at T&E, said: “Once again drivers’ pain is oil companies’ gain. Oil companies have every incentive to keep Europe hooked on fossil fuels, as they’re the ones benefiting from price spikes. The EU should reinstate its tax on excess profit and invest the proceeds in the electrification and renewables that will finally break that cycle.”

By 23 March, average EU diesel prices had reached €2.06 per litre and petrol €1.89 per litre. This represents rises of €0.49 and €0.27 respectively, adding roughly €27 to a typical diesel fill-up and €15 for petrol vehicles.

Structural factors limit policy impact

Around 20% of Europe’s diesel is imported, meaning a portion of these profits is generated outside the EU. This could reduce the effectiveness of any renewed windfall tax, as some gains would fall beyond the reach of European policy measures.

The EU previously introduced a temporary levy in 2022, taxing fossil fuel profits exceeding 20% above the 2018–2021 average. That measure generated approximately €28 billion over two years, demonstrating the potential scale of such interventions. T&E argues that reinstating this mechanism could help redirect oil excess profits toward investments in electrification and renewable energy, potentially reducing long-term exposure to fuel price shocks.