WASHINGTON (AP) — President Joe Biden on Wednesday will ask Congress to suspend federal gasoline and diesel taxes for three months — a move intended to ease financial pressures at the pump that also reveal the political toxicity of high gas prices in an election year.
The Democratic president will also ask states to suspend their own gas taxes or grant similar relief, according to government officials, who previewed his proposals on condition of anonymity because they were not authorized to speak publicly.
It’s about the federal tax of 18.4 cents per gallon on gasoline and the federal tax of 24.4 cents per gallon on diesel fuel. If gas savings were fully passed on to consumers, people would save about 3.6% at the pump at average prices $5 per gallon nationwide.
But many economists and lawmakers from both parties see the idea a gas tax holiday with skepticism.
Barack Obama, during the 2008 presidential campaign, called the idea a “gimmick” that would allow politicians “to say they did something.” He also warned that oil majors could offset the tax breaks by raising prices.
High gas prices pose a fundamental threat to Biden’s electoral and political ambitions. They have caused confidence in the economy dipping to lows that bode ill for the defense of Democratic control of the House and Senate in November.
Biden’s previous efforts to cut gas prices — including the release of oil from the US strategic reserve and larger ethanol blend this summer – have done little to make savings at the pump, a risk that carries over to the idea of a gas tax exemption.
Biden has acknowledged that gas prices have dampened public enthusiasm as he tried to convince people the US can still transition to a clean energy future. in the an interview with The Associated Press Last week, Biden described a country already bearing some psychological scars the coronavirus pandemic who now worries about how to afford gas, groceries and other essentials.
“When you notice things were a lot more optimistic until gas prices started to rise,” Biden said.
The President can do remarkably little to set prices driven by global markets, for-profit corporations, consumer demand and aftershocks Russia’s invasion of Ukraine and subsequent embargoes. The underlying problem is a shortage of oil and refineries producing gas, a challenge that a tax holiday cannot necessarily solve.
Mark Zandi, chief economist at Moody’s Analytics, estimates that the majority of them inflation of 8.6% observed in the US over the past 12 months are due to higher commodity prices due to the Russian invasion and ongoing disruptions from the coronavirus.
“In the short term, containing the rise in oil prices is crucial,” Zandi said last week, hinting that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help increase supply and lower prices.
Republican lawmakers have sought to pin more blame on Biden, saying he created a hostile environment for domestic oil producers, keeping their output below pre-pandemic levels.
Republican Senate leader Mitch McConnell ridiculed the idea of a gas tax holiday in a speech in February. “They spent a whole year waging a holy war against affordable American energy, and now they want to use a bunch of taxpayer dollars to hide the consequences,” he said.
Speaker of the Democratic House of Representatives Nancy Pelosi has previously expressed doubts about the value of the federal gas tax suspension.
Administrators said the $10 billion cost of the gas tax exemption would be paid and the Highway Trust Fund fully maintained, although gas taxes are a significant source of income for the fund. The officials did not name any new sources of income.
The President has also called on energy companies to adopt lower profit margins to increase oil production and refinery capacity for gasoline.
This has increased tensions with oil producers: Biden has judged the companies make “more money than God”. This set off a chain of events in which the head of ChevronMichael Wirth, sent a letter to the White House saying the government has “largely attempted to criticize and sometimes denigrate our industry.”
Asked about the letter, Biden said of Wirth, “He’s mildly touchy. I didn’t know her feelings could get hurt so easily.”
Energy companies are due to meet with the energy minister on Thursday Jennifer Granholm Discuss ways to increase supply.
(Copyright (c) 2022 Sunbeam Television. The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, transcribed or redistributed.)
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