The U.S. Senate tried but failed to pass a windfall tax on oil company profits earlier this month, with Democrats unable to muster enough support from across the aisle to withstand a threatened Republican filibuster and White House veto.

The arguments in favor of the tax were based on the same assumption that guides most U.S. tax policy – those able to pay more should do so. The measure would have imposed a 25 percent tax rate on the five largest oil companies whose profits were deemed “unreasonable.” Those companies collectively netted $36 billion in the first three months of the year. The tax, if it had been approved, would have landed the government $10 billion to $12 billion.

In addition, the measure would have eliminated $17 billion in tax breaks currently extended to Big Oil, and would have curtailed energy speculation and price gouging.

Republicans, such as Texas Sen. Kay Bailey Hutchison, said the tax would not work and described a previous effort, the 1980 windfall oil tax, as “an abject failure.”

Whether the tax would have “succeeded” or not begs for some definition. If it brought in the projected revenue, that money could have been used for a host of initiatives, such as tax incentives for people buying hybrid vehicles and improving the insulation of their homes, and funding home heating assistance programs such as LIHEAP.

The tax would not have reduced prices at the pump, but it would put oil companies on notice that further government intervention in the market could follow. One might imagine an oil company executive lighting another cigar, sipping brandy and laughing at such an implied threat, but recent actions by the industry to polish its image suggest otherwise.

A TV ad campaign for the industry asks: “If you’re wondering who owns ‘Big Oil,’ chances are good the answer is ‘you do.’ If you have a mutual fund account, and 55 million U.S. households do, there’s a good chance it invests in oil and natural gas stocks. If you have an IRA or personal retirement account, and 45 million U.S households do, there’s a good chance it invests in energy stocks. … [T]he bulk of ‘Big Oil’ benefactors are hardworking men and women across America.”

Citgo launched a similar campaign to remind customers its stations are individually owned, while Exxon-Mobil took another tack, announcing it would sell its retail gas stations and focus on wholesale distribution.

A windfall profits tax may be more of a knee-jerk reaction than a measured and proven fix of the current oil crisis – more punitive than corrective. But a true shortage of supply would mean prices increased to compensate for a lower volume of oil and gas sales. That is not the case. Profits are increasing as steeply as are the costs to consumers, so the government is justified in taking action.