Biden calls for 3-month suspension of gas tax, but faces long odds to join Congress


“By suspending the 18-cent gas tax, the federal gas tax for the next 90 days, we can lower the price of gas and give families a little relief,” Biden said in a speech from the White House.

The president said, “I fully understand that the gas tax credit alone will not solve the problem, but it will provide families with some immediate relief, just a little breathing space as we continue to work to lower prices in the long run.”

The idea has a long standing prospect of getting Congress to approve such a move after facing a backlash from the president’s allies on Capitol Hill.

Biden also called on states to take steps to eliminate their taxes on gas and diesel. Oil refiners will be asked to increase their capacity before their planned meeting this week with administration officials.

Biden claimed that the combined moves could lower the price of a gallon of gas by $1. However, that number depends on a number of steps completely outside the president’s control — not the least of which is persuading a skeptical Congress to agree to his plan.

These steps amount to Biden’s latest attempt to show that he has taken the lead in lowering fuel prices as Americans are frustrated by the financial burden. White House officials have been considering a gas tax exemption for months, but have so far been put off in part by concerns about how it will be received in Congress.

Republicans are broadly opposed to raising the GAX tax. Even some Democrats, including House Speaker Nancy Pelosi, are lukewarm at the idea. In the past, top Democrats – including President Barack Obama during his 2008 campaign – viewed the gas tax credit as a “gimmick.”

However, in the face of mounting anger and the onset of the summer driving season, Biden decided that even small steps approaching symbolism were worth making.

“In the circumstances we are in today, this is not a gimmick, it’s a little breathing room for the American people as summer driving season enters,” said Amos Hochstein, the State Department’s senior energy security adviser. In an interview with CNN “The 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 these taxes were passed on directly to consumers—which is not guaranteed—the savings for a single fill-up could be just a few dollars.

Biden expected to support federal gas tax exemption as he steps up his criticism of the oil industry amid rising prices
Even some Democrats previously questioned A Gas tax exemptionNoting that the tax provides an important source of financing for road construction. Officials said Biden will advocate that other revenue sources be used to make up for the shortfall, and worked to allay some of those concerns on Tuesday.

“Look, it will have some impact, but it will not have an impact on the construction of major roads and major repairs,” he told reporters.

Skeptical Economists

Some economists also say that the savings passed on to consumers can be negligible because retailers simply raise the base price of gas to make up the difference.

“Regardless of the benefits of the February gas tax credit, it’s a worse idea now,” Jason Furman, the Obama administration’s senior economic official, wrote on Twitter. “Refineries are more constrained now, so supply is almost completely inelastic. Most of the 18.4 percent reduction will be won by the industry – with perhaps a few cents passed on to consumers.”

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

“The president is calling and asking the industry, companies and retailers to get that to the consumer at the pump,” Hochstein said, without detailing anything specific the president could do to ensure consumers see the entire savings.

“We will scrutinize it thoroughly, and call on the industry to do exactly that, to pass it,” 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 to relieve some of that pain at the pump, and we see it as part of a suite of policies designed to provide that relief, including policies focused on the supply side,” the official said.

However, even there, quick action seems difficult. Refining capacity cut-off during covid-19 pandemic It would take several months to get online, and the refineries are now operating at nearly 90% of their capacity.

“We certainly are dealing with it in constructive, actionable, and pragmatic ways. I think again the American people want their leaders to do that,” a second senior administration official said, referring to Thursday’s meeting with seven senior executives and Energy Secretary Jennifer Granholm.

Biden is looking for a scapegoat

The president has heightened tension on oil and gas companies in recent weeks as gas prices have soared, with the national average rising above $5 a gallon at some point last week.

Biden made Russia’s war in Ukraine a scapegoat for high gas prices, but he also called on oil and gas companies, saying they weren’t doing enough to cut costs and accusing them of profiting from the war. He repeated some of those arguments on Tuesday, saying the country needed “more refining capacity.”

“The idea that they do not have oil to explore and extract is simply not true,” he said.

In response to the president’s criticism, the oil industry has largely said the Biden administration’s fault is that prices are too high because of what they see as restrictions on domestic oil and gas production.

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

“Your administration has largely sought to criticize, and at times discredit, our industry,” Worth wrote in an open letter to Biden. These actions are not helpful to meet the challenges we face and are not what the American people deserve.

“He’s kind of sensitive,” Biden responded later in the day, adding, “I didn’t know they were going to get hurt so quickly.”

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