WASHINGTON, D.C. — With resentment and desperation growing among Americans amid soaring fuel costs, the Biden administration is scrambling to ease the pain at the pump, and made a largely symbolic attempt to do so on Wednesday.
In a move that economists believe will make little difference if any on actual prices at the pump, President Biden called on Congress to suspend the federal gas and diesel tax until September.
The “gas tax holiday” is unlikely to see widespread support from either the Democratic or Republican Party and has previously been derided as “gimmick” by economists, and even former President Obama during his campaign trail in 2008.
Even if oil companies agree to pass along some of the savings, instead of pocketing them entirely, consumer may only be relieved by a few cents, according to former White House senior economist Jason Furman.
There is no way for the Biden administration to force companies to pass the tax cut savings to consumers.
The president is combining this call with a call to states to remove their own taxes on gas and diesel and asking oil companies to increase production. Even if this occurs, and Congress gets on board, consumers may see savings of up to $1.
The current federal tax is 18.4 cents per gallon on gas and 24.4 cents for diesel fuel.
Gas prices have no surpassed $5 in many parts of the country, including Michigan. AAA’s latest estimates show a national average of $4.95, with Michigan hitting an average of $5.13 as of Wednesday.
“By suspending the 18-cent gas tax, federal gas tax for the next 90 days, we can bring down the price of gas and give families just a little bit of relief,” Biden said in a speech from the White House on Wednesday, adding, “I fully understand that a gas tax holiday alone is not going to fix the problem, but it will provide families some immediate relief, just a little bit of breathing room as we continue working to bring down prices for the long haul.”
But House majority leader Nancy Pelosi (D-CA) did not immediately endorse the move. Republicans have historically stood against gas tax holidays.
Senate majority leader Chuck Schumer (D-NY) also indicated the unlikelihood the proposal would advance in Congress.
“Senate Democrats tried to pass it recently and it was blocked by Republicans,” Schumer said. “I believe the most important thing we can do to lower gas prices is crack down on Big Oil’s manipulation of the gas market.”
The taxes are used to fund road work, and officials have said they would seek other revenue sources to make up for the difference.
Biden scapegoated Russia once again in his remarks, reasoning the ban on Russian energy imports by saying his government could not “turned a blind eye to Putin’s murderous ways” in Ukraine. Russian energy goods only make up for a tiny percentage of total U.S. energy imports.
He also put pressure on oil companies to increase production and bring down prices at gas stations on Wednesday, just as his administration has in recent days.
“To the companies running gas stations and setting those prices at the pump… this is a time of war, global peril, Ukraine,” Biden said. “These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product.”
But oil companies have shot back, blaming the administration for limits on domestic oil and gas production. Refining capacities dropped during the peak of COVID-19 and are unlikely to jump back in a short enough period to drastically affect supply.
Soaring gas prices are driving a July visit by Biden to Saudi Arabia, as the U.S. hopes the oil rich kingdom — which Biden has previously called a “pariah” state for its human rights record — will increase oil production.
Gas prices have hit alarming highs in recent weeks in the vehicle-dependent state of Michigan.
Governor Whitmer called on Biden to pause the federal gas tax on Tuesday and then praised his appeal to Congress on Wednesday.
“Americans are feeling the pain at the pump with gas reaching $5 a gallon this month, so I am glad that President Biden is calling for a temporary suspension of the federal gas tax,” Whitmer said. “If we suspend the Michigan sales tax on gas and also get this done, we can save families nearly 50 cents a gallon right now.”
Whitmer proposed a temporary suspension of the state sales tax on gas in March and proposed $500 rebate checks for working families last month. She promised to work with the state’s legislature to relieve fuel burdens in the state.
Leave a Reply