Hastings-on-Hudson, New York - Based on an analysis of economist Dean Baker, co-founder of the Center for Economic and Policy Research, we estimate about 25 percent of oil company profits since the 2003 invasion of Iraq can be traced to the war's impact on world oil prices.

    On this basis, the excess war profit for ExxonMobil alone, between 2003 and 2008, would amount to about $40 billion.

    A 25 percent excess war profits tax imposed on the Big Five oil companies - ExxonMobil, Shell, BP, Chevron and ConocoPhillips - covering the first five years of the war would capture almost $90 billion. This estimate takes into account that Shell and BP are not American companies and that excess profits taxes would be only on profits from their US operations.

    As discussed in Part I, there is justification for focusing the tax on the Big Five because of their size compared to their smaller competitors. The Big Five had combined profits of $120 billion in 2005, compared to about $31 billion for the next 20 largest oil firms combined, according to a 2007 report from the James W. Baker Institute for Public Policy at Rice University. The report noted the Big Five "also dominate the US gasoline market with roughly 62 percent of the retail market and 50 percent of refining capacity."

    The Rice report found that the Big Five, unlike the smaller firms, have been spending a high proportion of their windfall profits on stock buybacks to enrich management and large stockholders. They were spending less, compared to their smaller competitors, on dividends, exploration, development and acquisitions.

    The Big Five and other oil companies have been anxious for passage of an Iraq oil law that could lead to very favorable long-term production agreements, dramatically expanding their oil reserve holdings, the basis of their profit and survival. The prize in Iraq is the third largest proven oil reserve in the world under the control of an occupied government compliant to Western oil companies.

    The US Energy Information Agency notes that extraction costs for Iraq are among the lowest in the world.

    The Big Five and other oil companies have been importing oil from Iraq since before the invasion, purchasing it through that nation's oil company. Indeed, in late 2002, just prior to the invasion, US oil companies doubled their Iraqi imports to compensate for a drop in Venezuelan shipments. In April 2008, imports from Iraq to the US were slightly below the level at the time of the invasion. The following companies, along with the Big Five, imported Iraqi oil into the US in January 2008: Flint Hills Resources, Koch Supply & Trading Company, Marathon Petroleum, Tesoro, Total and Valero. The Big Five and Valero are constant importers of Iraqi oil, month to month; imports by the other firms are less regular.

    While the current oil imports are simply an extension of pre-invasion business, the fact of the invasion raises significant ethical, legal and war-profit issues, particularly because the invasion was a violation of international law. The invasion and occupation mean that oil that was being legitimately purchased from an independent Iraqi government entity prior to the invasion has become oil being purchased from an occupied government by firms in league with the occupier, raising questions about fairness in terms and price.

    The invasion also means US military forces have been, and continue to be, used to secure Iraq's oil fields for exploitation by major oil companies that might otherwise not been given these rights.

    The ethical and legal issues are brought into sharp focus by the controversy that has arisen around the occupied Iraqi government's announced intention to award no-bid oil service contracts to ExxonMobil, Shell, BP, Chevron and France's Total, clearly a sign of favoritism. The wide publicity given to the sweetheart deal appears to have caused some Iraqi politicians to stall the awarding of the service contracts. Reuters reported Ali Hussain Balou, head of the Iraqi Parliament's Oil and Gas Committee, "demanded an explanation from Oil Minister Hussain al-Shahristani on plans to offer a series of short-term technical support contracts worth $500 million each to a handful of Western oil majors without competitive bidding."

    One could argue, therefore, imports of oil from Iraq to the US should be barred on ethical grounds. However, another approach, which recognizes the pre-existing oil trade between the two countries and the mutual benefit of that trade, would be to impose a 95 percent excess war profits tax on all oil imported from Iraq for as long as any US military forces, including military contractors, are on Iraqi soil. Following a precedent in World War II excess profits tax law, a base line for measuring profit on the oil imports could be an average of profits over several years prior to the invasion.

    This tax would cover oil now being imported into the US from Iraq and any expansion of imports. For the Big Five, this tax would be added to the excess war profits tax applied to their annual profits across the board.

    The top priorities in the use of revenue generated by these taxes should be: the restoration of human services to the Iraqi people; the rebuilding of the Iraqi economy; aid to families of Iraqi war victims; and providing US veterans and their families, particularly the families of war casualties, with adequate income, health care and jobs.

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    Nick Mottern is the director of Consumersforpeace.org.