Exxon Mobil Sues to Try to Block EU Windfall Tax
Exxon Mobil has tried to block what it called a “counterproductive” new windfall tax imposed by the European Commission as part of efforts to ease the sting of soaring energy prices across the 27-nation bloc.
The American oil giant’s subsidiaries in Germany and the Netherlands filed a lawsuit in the General Court of the European Union in Luxembourg on Wednesday. The court must now decide whether to take up the case, which claimed that the European Council lacked the authority to impose the tax.
Since the disruption to fossil fuel deliveries to Europe following Russia’s invasion of Ukraine in February, major oil and gas companies have raked in multibillion-dollar profits, while consumers have faced energy prices that have more than doubled.
Exxon said earlier this year that the tax would cost the company $2 billion through 2023 The company reported global profits of $20 billion for this year.
A spokesman for Exxon Mobil, Casey Norton, said that while the company recognized the burden that high energy bills have placed on families and businesses in Europe, it did not agree that a windfall tax would solve the problem.
“This tax will undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products,” Mr. Norton said. “European industries already face a very real competitiveness crisis, and governments should be supporting the production of reliable and affordable energy.”
The European Council, which is the executive branch of the E.U., passed the tax under a clause that allows it to surpass the bloc’s parliament in emergency situations, which Exxon argues is overreaching the body’s authority. The tax is to take effect Dec. 31.
Individual E.U. member states have enacted their own policies to try to spread the pain of high energy bills.
This month, the German Parliament passed legislation aimed at halting spiraling electricity and gas bills for households and industry by capping the price of gas and electricity based on last year’s levels. The package, which sets limits on bonuses for managers of companies benefiting from the law, is funded by a levy on energy producers’ excess profits. The law, which is expected to raise 100 billion euros, or $106 billion, will take effect in March but function retroactively from January.