Biden will call for federal gas tax suspension, urge states to do the same

President Joe Biden Called Congress on Wednesday suspend federal gasoline and diesel taxes By the end of September, preparing the move as necessary to provide Relief to American consumers But it is not enough to solve the problem of rising energy prices.

“By suspending the federal gas tax, the 18 percent gas tax for the next 90 days, we can lower the price of gas and provide some relief to families,” Biden said in a speech from the White House.

The president said, “I fully understand that the gas tax holiday alone will not solve the problem, but it will provide some immediate relief to families, just a little breathing space as we continue to reduce prices for the long term.” To continue working.”

The idea is facing long odds of Congress approving such a move after the president faced setbacks from his allies on Capitol Hill.

Biden also called on states to take steps to remove their own taxes on gas and diesel. And he will ask oil refining companies to ramp up their capacity ahead of his planned meeting this week with administration officials.

Combined, Biden claimed, the move could lower the price of gas by $1 per gallon. Yet that figure hinges on a number of steps entirely outside of the president’s control—not least one of which is suspiciously convincing Congress to approve his plan.

The move is Biden’s latest attempt to show he is taking the initiative in slashing fuel prices as Americans grow increasingly frustrated with the financial burden. White House officials have been considering a gas tax holiday for months, but have so far put it on hold because of concerns in Congress over how it might be achieved.

Republicans widely oppose tax removal. Even some Democrats, including House Speaker Nancy Pelosi, have remained quiet on the idea. And in the past, senior Democrats — including President Barack Obama on the campaign trail in 2008 — have cast gas tax holidays as a “gimmick.”

Yet in the face of mounting anger and the start of the summer driving season, Biden determined that even small steps on the symbolic frontier are worth taking.

“The situation we are in today is not a gimmick, it is breathing space for the American people as we approach the summer driving season,” said Amos Hochstein, senior adviser for energy security at the State Department. In an interview on CNN’s “New Day” Wednesday morning.

The current federal tax on gas is about 18 cents per gallon, while the federal tax on diesel is 24 cents per gallon. Even if the savings from raising those taxes were passed on directly to consumers—which isn’t guaranteed—the savings may be only a few dollars to fill one.

Even some Democrats have cast doubt on it before. gas tax holiday, given that the tax provides an important source of funding for road construction. Officials said Biden would ask for other revenue sources to be used to make up the shortfall, and he worked to address some of those concerns on Tuesday.

“Look, it will have some effect, but it is not going to affect major road construction and major repairs,” he told reporters.

Economists are skeptical

Some economists also say that the savings passed to consumers may be minimal as retailers only increase the base price of gas to make up the gap.

Jason Furman, a senior economic official in the Obama administration, wrote on Twitter: “Everything you thought about the merits of the gas tax holiday in February is now a bad idea.” “Refineries are now even more constrained so supplies are almost completely inelastic. Most of the 18.4 percent reduction will be done by industry – maybe a few cents passed on to consumers.”

Senior administration officials have acknowledged that criticism, but said Biden would pressure companies to pass along the savings.

“The president is calling and demanding that industries, companies, and retailers pass on the consumer at the pump,” Hochstein said, without detailing anything the president can do to ensure that consumers save. See completeness.

“We will investigate this and we call on the industry to do exactly that, get it passed,” he said.

Another official, speaking before the announcement, admitted that simply suspending the tax “won’t solve the whole problem.”

“It’s something that can be done to take a real step toward alleviating that pain at the pump, and we see it as part of a suite of policies designed to provide relief.” These include policies focusing on the supply side,” the official said.

Yet even there quick action seems difficult. Refining capacity which was cut during covid-19 pandemic It will take months to get back online, and refineries are now operating at about 90% of their capacity.

“We are certainly getting it in constructive, actionable, practical ways. I think again, the American people would like their leaders to do that,” a second senior administration official told seven top officials and the energy secretary on Thursday. Noting the meeting with Jennifer Granholm said.

Biden seeks scapegoat

The president has turned the heat on oil and gas companies in recent weeks as gas prices soar, with the national average climbing above $5 a gallon at one point last week.

Biden has made Russia’s war in Ukraine its top scapegoat for soaring gas prices, but has also singled out oil and gas companies, saying they are not doing enough to reduce costs and They are accusing him of profiting from the war. He reiterated some of those arguments on Tuesday, saying the country needed “more solvency”.

“The idea that they don’t have oil to drill and bring in is just not true,” he said.

In response to the president’s criticisms, the oil industry has said largely that it is the Biden administration’s fault that prices are so high that they see as limiting domestic oil and gas production.

Chevron CEO Mike Worth said in a letter Tuesday that Biden should stop criticizing the oil and gas industry and called for a “change of approach” from the White House.

“Your administration has largely tried to criticize, and at times defame our industry,” Worth wrote in an open letter to Biden. “These actions are not beneficial to the challenges we face and the American people do not deserve.”

Biden responded later in the day: “He’s mildly sensitive,” adding: “I had no idea he’d hurt his feelings so quickly.”

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