Windfall taxes bullish for oil prices not bearish

Windfall taxes are getting suggested again by the us and in the uk and to me it sounds like a great discussion to have as investors.

a 50% windfall tax would mean that for every dollar i make more last year i will pay 50% and the idea is that this will go to cosumers.

even though its a populair policy it doesnt help and works agaisnt u in the long term.

the issue comes with inflation. to drill a new well cost more because labour matrial costs are going up. so does the cost to drill the new well. this means that oil prices need to rise in the first place to make sence of drilling to continue and makes older wells more profitble.

the second issue is the companys are already held back on investing. oil companys are more focussed on returning capital then ever before. the amouth of companys focussed on production growth is still low.

a windfall tax would make the investment case for domestic terrible and make companys more foccused on returning capital to investors and investing in other countries.

last time the us got a windfall tax during the 1980's domestic production took a massive hit which i needed to recover from another decade.

a windfall tax would most likley do the same now if not worse pushing the oil price to a level where the it would just compensate companys and push profits to forgein companys.