Washington – President Joe Biden called on Congress on Wednesdayfor three months – an idea that is meant to reduce the financial pressure at the pump, but that also reveals the political toxicity of high gas prices for the midterm elections in November.
He also called on states to suspend their own gas taxes or provide similar relief, given that state gas taxes run an average of 30 cents a gallon.
“Today, I call on Congress to stop the federal gas tax for the next 90 days, through the busy summer season, busy travel season,” said Mr. Biden said Wednesday.
The problem is the federal tax of 18.4 cents per gallon on gas and the federal tax of 24.4 cents per gallon on diesel fuel. If the gas savings were fully passed on to consumers, Americans would save about 3.6% at the pump with prices averaging about $ 5 per gallon nationwide. But many economists and lawmakers from both parties are considering the idea of a gas tax holiday with skepticism, suggesting that it will not do much to help consumers and may even increase demand.
House President Nancy Pelosi was not obligated about Mr. Biden strives for a vacation for gas tax, and Rep. Peter DeFazio, chairman of the House Committee on Transport and Infrastructure, was concerned about the proposal.
“While well-intentioned, this policy would achieve at its best but minuscule relief by blowing a $ 10 billion hole in the Highway Trust Fund that would have to be filled if we were to continue repairing crumbling bridges. , tackle the peak in road deaths, and build a modern infrastructure system, “DeFazio said in a statement. “To encourage state governments to stop their gas taxes under the influence of the Bipartisan Infrastructure Law by reducing funds available to states to spend on infrastructure improvements.”
Republicans were even more critical. Top Senate Republican John Thune called the proposal “death upon arrival,” and GOP Senator John Barrasso called the gas tax holiday a “desperate Hail Mary pass.”
Barack Obama, during the 2008 presidential campaign, called the idea a “gimmick” that politicians could “say they did something about.” He also warned that oil companies could offset the tax burden by raising their prices.
Energy Secretary Jennifer Granholm admitted that 18 cents, when consumers actually see that full reduction, is a “modest amount.” But that has to be combined with state gas tax cuts, and some price reductions from oil and gas companies, she said.
Mr. Biden on Wednesday urged businesses to pass on savings to consumers, though Washington has no mechanism to enforce that. Congress should impose a gas tax holiday. The president does not have that power.
“I urge businesses to pass this, every penny of this 18-cent reduction, to consumers,” the president said. “There is no time for profit now.”
High gas prices pose a fundamental threat to Mr. Biden’s election and policy ambitions. They have caused confidence in the economy to plummet to gaps that do not bode well for defending Democratic control of the House and Senate in November.
The president’s past efforts to cut gas prices – including the release of oil from theand greater ethanol blending this summer – have not done much to produce savings at the pump, a risk that surpasses the idea of a gas-tax holiday.
Mr. Biden has acknowledged how gas prices have been a drain on public enthusiasm as he tries to convince people that the US can still turn to a future with clean energy. In an interview with The Associated Press last week, he described a country that already has some psychological scars fromc that is now worried about how to pay gas, food and other essentials.
“As you can see, until gas prices started to go up,” he said. Biden said, “things were much more, they were much more optimistic.”
The president can do remarkably little to repair prices set by world markets, profit-driven companies, consumer demand and aftershocks ofand the embargoes that followed. The underlying problem is a , a challenge a tax holiday can not necessarily fix. Mr. Biden on Wednesday defended his decision to support Ukraine and impose restrictions on Russia.
“We could turn a blind eye to Putin’s murderous ways, and the price of gas would not have spiked as it has,” the president said. “I believe that would have been wrong. I believe then and I believe now, the free world had no choice.”
Mark Zandi, chief economist at Moody’s Analytics, estimates that the majority of the 8.6% inflation seen in the past 12 months in the US is due to higher commodity prices due to the invasion of Russia and persistent coronavirus disorders.
“In the immediate short term, it is critical to stop the rise in oil prices,” Zandi said last week, suggesting that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help boost supplies and to lower prices.
Republican lawmakers have tried to blame the president more, saying he has created a hostile environment for domestic oil producers, keeping its exports below pre-pandemic levels.
Republican Senate Leader Mitch McConnell mocked the idea of a gas tax holiday in a February speech. “They have spent an entire year waging a holy war against affordable American energy, and now they want to use a pile of taxpayers’ money to hide the consequences,” he said.
Pelosi, has previously indicated that Washington should find a way to pay for the tax holiday, saying funds should come from the Highway Trust fund.
“The question is,” she said then, “is it worth the effort to get money, to go back to cover the deficit and the trust fund, to get a break at the Big Oil Companies?”
Administration officials maintain that the $ 10 billion cost of the gas tax holiday will be paid and keep the Highway Trust Fund full, even though the gas taxes make up a substantial source of revenue for the fund. The officials do not specify any new sources of income.
The president has also called on energy companies to accept lower profit margins to increase oil production and refining capacity for gasoline.
This has increased tensions with oil producers: Mr. Biden has judged companies to “make more money than God.” That began a chain of events in which Chevron chief Michael Wirth sent a letter to the White House stating that the administration “has for the most part tried to criticize our industry, and sometimes destroy it.”
Asked for the letter, Mr. Biden said of Wirth: “He’s slightly sensitive. I did not know they would hurt their feelings so quickly.”
Energy companies are scheduled to meet with Granholm on Thursday to discuss ways to increase supply.
Still, the White House on Wednesday pointed out that, “Although the United States produced more oil during the first year of this administration than it did during the first two years of the previous administration, it is on track to set new records next year. . “
Rebecca Kaplan and Alan He contributed to this report.