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Even as Vladimir Putin’s barbaric invasion of Ukraine proceeds and concerns over the subsequent high gas prices proliferate, we cannot forget that the climate crisis remains a dire emergency. The latest report of the U.N.’s Intergovernmental Panel on Climate Change (IPCC)—the most authoritative source on climate change research—could not be more explicit in reaching this conclusion. U.N. Secretary General António Guterres described the report as a “file of shame, cataloguing the empty pledges that put us firmly on track towards an unlivable world.” This follows several equally vehement studies in recent years, as well as those from other credible climate researchers.

If we are finally going to start taking the IPCC’s findings seriously, it follows that we must begin advancing far more aggressive climate stabilization solutions than anything that has been undertaken thus far, both within the U.S. and globally. Within the U.S., such measures should include at least putting on the table the idea of nationalizing the U.S. fossil fuel industry.

One specific way to proceed would entail the federal government purchasing controlling ownership of at least the three dominant U.S. oil and gas corporations: ExxonMobil, Chevron, and ConocoPhillips. We could start with these giants because they are far larger and more powerful than all the U.S. coal companies combined, as well as all of the smaller U.S. oil and gas companies. The cost to the government to purchase majority ownership of these three oil giants would be about $420 billion at current stock market prices. This is a formidable sum, but it is only slightly more than 10 percent of the roughly $4 trillion that the Federal Reserve authorized to spend to bail out the corporate sector in 2020, during the COVID lockdown and recession.

The main argument for nationalizing the U.S. oil giants is straightforward. The single most important factor causing climate change is that we continue to burn oil, natural gas, and coal to produce energy. It follows that we must stop burning fossil fuels to have any chance of moving the global economy onto a viable climate stabilization path. By contrast, the purpose of private fossil fuel companies in the U.S. and elsewhere is precisely to make profits from selling oil, coal, and natural gas, no matter the consequences for the planet and regardless of how the companies may present themselves in various high-gloss, soft-focus PR campaigns.

With at least ExxonMobil, Chevron, and ConocoPhillips under public control, the necessary phaseout of fossil fuels as an energy source could advance in an orderly fashion. The government could determine fossil fuel energy production levels and prices to reflect both the needs of consumers and the requirements of the clean-energy transition. This transition could also be structured to provide maximum support for the workers and communities that are presently dependent on fossil fuel companies for their well-being.

Oil Profits and Inflation

Our current bout with high inflation provides only the most recent reminder of the absolutely central role played by oil companies in the U.S. economy’s operations. Overall, inflation in February of this year was up to 7.9 percent, a 40-year high. The increase in retail energy prices alone accounted for roughly two percentage points (or 24 percent) of the overall inflation rate. The main specific drivers, in turn, of rising energy costs were the spikes in gasoline and fuel oil prices. As of April 4, the average price for gasoline at the pump increased over the past year from $2.85 to $4.17 per gallon, a nearly 50 percent rise.

It is true that the oil companies were clobbered during the initial COVID lockdown months, as energy demand collapsed. The price of gasoline bottomed out at $1.73 per gallon in April 2020, a 23 percent fall from the pre-COVID level. The stock prices of the three U.S. oil giants fell by nearly 50 percent during this brief period.

But such misfortunes were short-lived. The companies have been flourishing since COVID restrictions have eased. As of this writing in early April, the stock prices of the three big oil companies were nearly 60 percent higher than their pre-COVID levels. Their outsized profits are coming from the pockets of U.S. consumers paying $4.17 instead of $2.85 for a gallon of gasoline.

A nationalized U.S. fossil fuel industry could play a significant positive role in building the clean-energy infrastructure at the scale and speed we need.

And yet, if we are going to take the climate emergency seriously, we cannot advocate for gasoline prices to fall back to pre-COVID levels. On behalf of saving the planet, we actually need all fossil fuel prices to remain high, and indeed, if anything, to increase still further. This is because high prices for oil, as well as for natural gas and coal, will discourage consumers from buying fossil fuels to meet their energy needs. Correspondingly, high fossil fuel prices will incentivize efforts to build a new energy infrastructure, whose two pillars will be high efficiency and renewable energy, in particular solar and wind power. A high-efficiency, renewable energy-dominant infrastructure will, among other things, deliver cheaper energy than our current fossil fuel–dominant system.

But that cannot happen in an instant. In the meantime, we cannot allow working-class and middle-class people to experience cuts in their living standards right now through high fossil fuel prices, while oil companies’ profits explode. How can we effectively address these equally valid, though competing, considerations?

Some straightforward solutions are readily at hand, at least on paper, while recognizing that the fossil fuel companies will vehemently oppose all of them. One approach being considered in Congress now is a “windfall tax” on the oil companies’ current level of outsized profits. In the Senate version of this measure introduced by Sen. Sheldon Whitehouse (D-RI), the oil companies would be taxed at half the difference between the current retail oil prices and the average pre-pandemic price between 2015 and 2019. Reps. Ro Khanna (D-CA) and Peter DeFazio (D-OR) have introduced similar proposals in the House.

The average pre-pandemic price of gasoline was $2.37 per gallon. Based on the current average market price of $4.17 per gallon, the Senate version of the tax would amount to 85 cents per gallon; the calculation is ($4.17 - $2.37)/2 = $0.90. This calculation assumes no further adjustment for inflation. Over a year, the tax would generate a total of about $137 billion, based on current gasoline consumption levels. These revenues would then be channeled into compensating consumers for the spike in their energy bills. Every U.S. resident would receive nearly $400 if revenues from the tax were distributed equally to everyone.

Should Fossil Fuel Companies Be Profiting at All?

The Whitehouse version of the windfall profits tax does address all three of our competing matters of current concern. First, it takes back some of the oil companies’ excessive gains; second, it compensates consumers for their increased energy bills; and third, it does so without lowering gas prices. But thinking beyond the specific features of such windfall profits tax proposals raises a more basic question: Should the fossil fuel companies be permitted to profit at all through selling products that we know are destroying the planet? The logical answer has to be no. That is exactly why nationalizing at least the largest U.S. oil companies is the most appropriate action we can take now, in light of the climate emergency.

In assessing the merits of such an aggressive proposal, we need to recall that the current actions of the oil companies—prioritizing their profits over everything else—are nothing new. As is now well known, in 1982, researchers working at the then Exxon Corporation (now ExxonMobil) estimated that continuing to burn oil, coal, and natural gas to produce energy would generate exactly the types of massive climate disruptions that we are increasingly experiencing. We also know what Exxon did with this information—they buried it. They did so for the obvious reason that, if the information had become known, it would have threatened Exxon’s bottom line. There is no minimizing the fact that what Exxon did was immoral. But it is equally clear that the company behaved exactly according to their mission of protecting their profits above everything else.

Is Nationalization Realistic?

It is reasonable to conclude that nationalizing ExxonMobil, Chevron, and ConocoPhillips is beyond the realm of current political feasibility. Yet it was only 13 years ago, in the depths of the 2007–2009 financial crisis and Great Recession, that the Obama administration nationalized two of the three U.S. auto companies, General Motors and Chrysler. The government purchased majority ownership of these two companies because they were about to fail. Their failure would have generated devastating ripple effects, most critically for the workers and communities whose livelihoods were dependent on these companies. The government also took majority ownership of the giant insurance firm AIG at the same time. The reason, again, was that failing to do so would produce huge social costs, especially for people who received no benefit whatsoever from the Wall Street excesses that preceded the crash.

More generally, the U.S. government has undertaken nationalizations in many periods when the need was apparent. As Thomas Hanna writes in his excellent “A History of Nationalization in the United States: 1917–2009”:

The United States actually has a long and rich tradition of nationalizing private enterprise, especially during times of economic and social crisis. Importantly, this approach has often been deployed when private companies are hindering national efforts to address a crisis (either through obstruction, incompetence, or incapacity). This history of nationalization … suggests that far from being a non-starter, a public takeover of the fossil fuel industry should be considered an eminently plausible and viable policy option for dealing with the … climate crisis.

The Green Transition and Nationalization

Advancing a viable climate stabilization program does not just entail phasing out fossil fuels. It equally requires investments to build a new clean energy–dominant infrastructure throughout the globe. This will be no small task, even while the overall level of investments required should amount to no more than about 2.5 percent of global GDP between now and 2050.

A nationalized U.S. fossil fuel industry could play a significant positive role in building the clean-energy infrastructure at the scale and speed we need. To begin with, the profits of nationalized fossil fuel firms could be channeled into energy efficiency and renewable-energy investments, as well as transitional support for the workers and communities that are dependent on the fossil fuel industry. In addition, with nationalization, the political obstacles that fossil fuel companies now throw up against public financing for clean-energy investments would be eliminated.

To date, fossil fuel companies and their army of congressional minions continue to block clean-energy funding at anywhere close to the levels needed. West Virginia Democratic Sen. Joe Manchin is only the most obvious case in point. In the most recent installment of a nearly yearlong saga, Manchin is insisting on quid pro quo funding for fossil fuel corporations—which happens to include his own personal business holdings—in exchange for a diminished level of clean-energy investment support relative to President Biden’s original Build Back Better proposal.

Amid such machinations, it is fair to ask why the fossil fuel companies do not see the handwriting on the wall and transition themselves into clean-energy suppliers, much like auto manufacturers are transitioning from building internal-combustion-engine cars to zero-emissions vehicles. The big oil companies’ PR campaigns insist that they are indeed actively committed to exactly this transition, but the facts speak otherwise. The reason for their resistance is that the oil companies continue to swim in money from their current business model, and correctly assess that a clean energy–dominant infrastructure will not afford them the same outsized profit opportunities. Within a clean–energy infrastructure, Big Oil will not be able to exercise anything like the level of monopoly power they now enjoy. As Tyler Hansen’s recent analysis on comparative levels of profitability in the overall energy industry concludes, “the fossil fuel industry, in general, has enjoyed substantially greater profit margins than the renewable energy industry over the past decade, and there is little reason to think that the renewable energy industry will catch up in the near future, at least without a major change in energy policy.”

Nationalization With Open Eyes

Even while recognizing this, we also need to understand that nationalizing ExxonMobil, Chevron, ConocoPhillips, or even the entire private U.S. fossil fuel sector, is not a panacea. Publicly owned companies already control approximately 90 percent of the world’s fossil fuel reserves. These national corporations include, of course, Gazprom in Russia, but also Saudi Aramco, China National Petroleum Corporation, the National Iranian Oil Company, Petróleos de Venezuela, Petrobras in Brazil, and Petronas in Malaysia. None of these publicly owned companies operates with the same profit imperatives as big private energy corporations. But this does not mean that they are prepared to commit to fighting climate change simply because they are publicly owned enterprises.

Just as with private companies, producing and selling fos­sil fuel energy generates huge revenues for state-owned enterprises. National development projects, lucrative careers, and political power—including Russia’s capacity to finance its invasion of Ukraine—all depend on continuing the flow of large fos­sil fuel revenues. We should therefore not expect that, in and of itself, public ownership of the U.S. oil giants will provide favorable conditions for fighting climate change, any more than public ownership has done so already in Russia, Saudi Arabia, China, or Iran.

In the U.S. case, we also have to recognize that a nationalized oil industry operating under something akin to a second Trump presidency would likely destroy any of the benefits of taking the industry out of private ownership. Such an administration could, among other options, sell the public oil firms to cronies, reversing any benefits that would have accrued from nationalization.

All such threats are real. Nevertheless, the climate emergency requires us to take big political risks. We therefore need to continue advancing a viable climate stabilization program in full recognition that, at least in the U.S., the private oil companies stand as the single greatest obstacle to successfully implementing such a program. The most straightforward solution to overcoming this obstacle is to eliminate the profit motive altogether from the companies whose business model continues to be predicated on destroying the planet.

[Robert Pollin is Distinguished University Professor of Economics and co-director of the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst.]

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