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White House weighing federal gas tax holiday as prices soar

White House weighing federal gas tax holiday as prices soar


​The Biden administration is considering ​instituting a federal gas tax holiday as the average price of a regular gallon has soared above $5 — and the White House economic team could take up the matter later this week, according to a report. ​

The administration is scrambling to come up with solutions to ease Americans’ pain at the pump with inflation hitting 40-year highs and Democrats fearing economic turmoil that would doom their chances in this fall’s midterm elections.

“It’s definitely an option on the table,” ​a Democrat ​​close to the White House​ told The Hill on Monday​.

A suspension of the federal gas tax — currently 18.3 cents per gallon of regular fuel and 24.3 cents per gallon of diesel fuel — would require Congressional action.​​

Former UBS CEO Robert Wolf, an economic adviser to former President Barack Obama, told The Hill that he supports a federal gas tax holiday but only for the duration of Russia’s war in Ukraine, which he said has affected the global supply of oil and driven up prices. ​

“I know that some may view this as somewhat gimmicky because it will revert itself at some point, but a majority of the recent gas hike since the beginning of the year has been due to the Russian invasion,” Wolf ​said. “I think tying it solely to the war and setting an end date makes it more strategic and smart.​”​​

A number of states, including New York, have enacted gas tax holidays, but Wolf said he thinks President Biden could press those states that have not yet gotten on board.  

A suspension of the federal gas tax — currently 18.3 cents per gallon of regular fuel and 24.3 cents per gallon of diesel — would require congressional action.​​
DANIEL WILLIAM MCKNIGHT

​Last week, the Organization of the Petroleum Exporting Countries agreed to increase production, and the White House announced on Tuesday that Biden will travel to Saudi Arabia next month — a controversial move due to Saudi Crown Prince Mohammad bin Salman’s purported involvement in the murder of US-based journalist Jamal Khashoggi in 2018.

White House press secretary Karine Jean-Pierre was asked during a media gaggle on Air Force One Tuesday whether the Saudi trip amounted to a “Hail Mary attempt” to lower gas prices. 

Suspending the federal tax from March to December would only reduce average gasoline spending by between $16 and $47 during that time.
Suspending the federal tax from March to December would only reduce average gasoline spending by between $16 and $47 during that time.
STEFANI REYNOLDS/AFP via Getty Images
President Biden is considering ​instituting a federal gas tax holiday as the average price of a regular gallon has soared above $5.
President Biden is considering ​instituting a federal gas tax holiday as the average price of a regular gallon has soared above $5.
Jim Ruymen/UPI/Shutterstock

“While energy security is one important issue, it’s hardly the only one. Saudi Arabia is the chair of OPEC+, as you all know, and it’s the largest exporter,” she told reporters as the president flew to Philadelphia to speak to union leaders.

“Of course, we discuss energy with Saudi — the Saudi government, and we welcome its — its leadership in achieving a consensus amongst the group of — to increase planned supply increases by 50 percent last week,” Jean-Pierre added.

At the White House press briefing on Monday, Jean-Pierre tamped down talk of a gas price holiday: “We don’t have anything new for you to announce on gas prices or the gas tax.”

Starting today, New York is suspending its gas tax for the rest of the year in an effort to ease the financial burden on drivers.
Starting today, New York is suspending its gas tax for the rest of the year in an effort to ease the financial burden on drivers.
Spencer Platt/Getty Images

“It’s clear the White House is doing absolutely everything it can right now,” Josh Freed, leader of the climate and energy program at the centrist Democratic think tank Third Way​, told The Hill​. “It would make sense that a gas tax holiday is on the table as part of their strategy.”

B​ut some argue that a gas tax holiday wouldn’t really help motorists that much. ​

Suspending the federal tax from March to December would only reduce average gasoline spending by between $16 and $47 during that time, according to the Penn Wharton Budget Model released earlier this year. ​​

The report also said suspending the tax, which funds infrastructure projects, would lower federal tax revenue by about $20 billion.​​

Mark Zandi, chief economist at Moody’s Analytics, told The Hill that studies show the bulk of the tax cut could be captured by energy companies and the relief can’t be targeted to help lower- and middle-income Americans. ​

“You also run the risk of undermining funding for infrastructure, which is critical for the economy’s long-term growth,” he said.



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