Joe Biden presses for gas tax holiday, despite skepticism
President Joe Biden speaks about high gasoline prices at the White House on June 22, 2022. He wants Congress to suspend the federal gas tax. Credit: Getty Images/Drew Angerer
WASHINGTON — President Joe Biden and top administration officials continue to call on Congress to pass a federal gas tax holiday, but lawmakers on both sides of the aisle have expressed skepticism, and economists have raised concerns about the long-term impact of a limited tax break.
Biden, who met with Saudi officials on Friday in part to encourage Saudi Arabia to increase its production of oil, has for weeks called on Congress to suspend the federal gas tax for a 90-day period as American consumers have dealt with record high prices at the pump.
The call for a gas tax holiday is one in a series of actions the White House has taken since April to try to blunt the impact of high gas prices, including releasing a million gallons of oil per day from the nation’s strategic reserve and increasing permits for oil production on federal land.
Biden has argued that temporarily lifting the federal gas tax — roughly 18 cents per gallon for gasoline and 24 cents for diesel — will offer some relief for consumers.
But many lawmakers including House Speaker Nancy Pelosi are unconvinced, saying such a move could strip funding from the national Highway Trust Fund, which uses revenue from the federal gas tax to repair federal roadways.
In March, when some members of the Democratic caucus first raised the idea of a gas tax holiday, Pelosi (D-Calif.) described the proposal as a “very showbiz” idea that provided no guarantee savings would be “landing in the pocket of the consumer.”
After Biden, a Democrat, called on Congress on June 22 to consider a three-month gas tax suspension, Pelosi did not commit to bringing legislation forward.
“We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate,” she said in a statement.
Senate Majority Leader Chuck Schumer (D-N.Y.) also called it unlikely a gas-tax holiday would pass the evenly split chamber, where 10 GOP votes are needed to pass most legislation.
“Senate Democrats tried to pass it recently and it was blocked by Republicans,” Schumer told reporters last month.
He continued: “I believe the most important thing we can do to lower gas prices is crack down on Big Oil’s manipulation of the oil markets … Now we have legislation to do that and we're going to focus on that issue. There is no reason during this time of crisis that the oil companies should take such advantage.”
White House Press Secretary Karine Jean-Pierre, speaking to reporters last week before Biden’s Middle East trip, insisted the Biden Administration would “continue to call on” Congress to temporarily suspend the federal gas tax.
“We think it will have an important effect on American families and give them that little bit of breathing room that you hear the president talk about,” Jean-Pierre said.
Transportation Secretary Pete Buttigieg, speaking at an unrelated infrastructure event in Michigan on July 11, echoed those sentiments, telling the audience: “We continue to believe a gas-tax holiday could help take the edge off. While we are seeing some settling of gas prices, they're still — as everybody knows — way too high."
The average price for a gallon of gas on Long Island is $4.63. While that is down by 41 cents from last month, it still is higher than the average cost of $3.19 a year ago, according to data compiled by the American Automobile Association.
Several economists have said suspending the federal gas tax could contribute to already high inflation, by spurring consumers to buy more fuel.
“Needless to say, a gas tax holiday would also add to inflation,” tweeted Jason Furman, a former economic adviser to President Barack Obama.
“Probably not that much because the majority of it would be windfall profits for the oil industry and that is not particularly stimulative. But still goes in the wrong direction,” he wrote.
Frederick Floss, an economist at Buffalo State College, told Newsday the COVID-19 pandemic contributed to domestic supply issues as oil companies cut down on production because fewer people were traveling.
With Americans now returning to the roads, the supply of gasoline has struggled to keep pace, Floss said.
“What we really want people to do is cut back" on gasoline consumption "because the supply isn't there,” Floss said.
“Artificially lowering the price will mean that people won't cut back, and because they won't, that's going to keep the price higher, longer than it would have to be," he argued.
"Giving people money may make us feel good, but it doesn't necessarily help the market clear where we should be,” Floss said.
“The only way to solve these problems is to have the refineries refine more gasoline,” and for motorists to consume less fuel, he said.
But Rep. Tom Suozzi (D-Glen Cove) said in a statement, “I support suspension of the gas tax for three months, and have been calling for it since December. We must ensure the savings are passed on to the consumer. People are suffering and this little bit will help.”
Rep. Lee Zeldin (R-Shirley), the Republican nominee for New York governor, told Newsday in an email: “A gas tax holiday would provide some short-term help but that is absolutely not the end-all, be-all solution here. It’s time to ramp up domestic energy production and become energy independent again.”
Asked whether he would support a federal gas tax holiday, Rep. Andrew Garbarino (R-Bay Port) said in a statement: “Until we address the root causes of this energy crisis by restoring American energy independence, Long Island families are unlikely to feel any real and lasting relief at the pump."
Laura Figueroa Hernandez is the White House correspondent and previously covered New York City politics and government. She joined Newsday in 2012 after covering state and local politics for The Miami Herald.
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