High gas prices across the country are about the federal tax of 18.4 cents per gallon on gas and the federal tax of 24.4 cents per gallon on diesel fuel.
WASHINGTON — President Joe Biden on Wednesday will ask Congress to suspend federal taxes on gasoline and diesel for three months – a move intended to ease financial pressures at the pump and also reveal the political toxicity of high gas prices in an election year.
The Democratic president will also ask states to suspend their own gas taxes or grant similar relief, according to government officials, who previewed his proposals on condition of anonymity because they were not authorized to speak publicly.
It’s about the federal tax of 18.4 cents per gallon on gasoline and the federal tax of 24.4 cents per gallon on diesel fuel. If gas savings were passed on in full to consumers, people would save about 3.6% at the pump when prices averaged about $5 a gallon nationwide.
But many economists and lawmakers from both parties are skeptical about the idea of a gas tax exemption.
Barack Obama, during the 2008 presidential campaign, called the idea a “gimmick” that would allow politicians “to say they did something.” He also warned that oil companies could offset the tax breaks by raising prices.
High gas prices pose a fundamental threat to Biden’s electoral and political ambitions. They have caused confidence in the economy to plummet to a low that bodes ill for the defense of Democratic control of the House and Senate in November.
Biden’s previous efforts to slash gas prices — including releasing oil from the U.S. Strategic Reserve and greater ethanol blending this summer — have resulted in little savings at the pump, a risk that carries over to the idea of a gas tax holiday.
Biden has acknowledged that gas prices have dampened public enthusiasm as he tried to convince people the US can still transition to a clean energy future. In an interview with The Associated Press last week, Biden described a country already nursing some psychological scars from the coronavirus pandemic and now worried about how it can afford gas, food and other essentials.
“When you notice things were a lot more optimistic until gas prices started to rise,” Biden said.
The president can do remarkably little to set prices driven by global markets, for-profit corporations, consumer demand, and the aftermath of Russia’s invasion of Ukraine and subsequent embargoes. The underlying problem is a shortage of oil and refineries producing gas, a challenge that a tax holiday cannot necessarily solve.
Mark Zandi, chief economist at Moody’s Analytics, estimates that most of the 8.6% inflation seen in the US over the past 12 months is due to higher commodity prices due to the Russian invasion and ongoing disruptions from the coronavirus.
“In the short term, containing the rise in oil prices is crucial,” Zandi said last week, hinting that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help increase supply and lower prices.
Republican lawmakers have sought to pin more blame on Biden, saying he created a hostile environment for domestic oil producers, keeping their output below pre-pandemic levels.
Republican Senate leader Mitch McConnell ridiculed the idea of a gas tax exemption in a speech in February. “They spent a whole year waging a holy war against affordable American energy, and now they want to use a bunch of taxpayer dollars to hide the consequences,” he said.
Speaker of the Democratic House of Representatives Nancy Pelosi has previously expressed doubts about the value of the federal gas tax suspension.
Administrators said the $10 billion cost of the gas tax exemption would be paid and the Highway Trust Fund fully maintained, although gas taxes are a significant source of income for the fund. The officials did not name any new sources of income.
The President has also urged energy companies to accept lower profit margins in order to increase oil production and gasoline refining capacity.
This has increased tensions with oil producers: Biden has judged the companies make “more money than God”. That set off a chain of events in which Chevron CEO Michael Wirth sent a letter to the White House saying the administration “has largely attempted to criticize and sometimes denigrate our industry.”
When asked about the letter, Biden said of Wirth, “He’s a bit touchy. I didn’t know her feelings could get hurt so easily.”
Energy companies are scheduled to meet with Energy Secretary Jennifer Granholm on Thursday to discuss ways to increase supply.
https://www.fox43.com/article/news/nation-world/federal-gas-tax-holiday-biden-congress/507-87cf7bd2-bd7e-4d82-b3a2-0ae8fcf4e72e Federal gas tax holiday: Biden to call for 3-month suspension