Biden’s gas tax holiday unlikely to deliver much relief, experts say

As President
Joe Biden
calls for a pause in the federal gasoline tax, he is facing skepticism that the measure would provide substantial improvement for people at the pump.

At 18.4 cents per gallon, halting the federal
gas tax
would take a small bite out of
soaring prices
, which have reached $5 per gallon in recent weeks. The White House had considered a tax holiday in February as gasoline prices rose to nearly $3.50 per gallon before shelving the idea.

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But with prices soaring further, Biden is now eyeing a temporary three-month pause in the tax, calling on Congress and
states
to suspend their levies. Senior administration officials previewed the Wednesday decision as the latest effort to “blunt the impact of Putin’s price hike” ahead of the summer driving season.

The official said combined actions by the federal government, states, the
energy
industry, and retailers “could drop prices at the pump by up to $1 a gallon or more.”

Asked to account for the $1 deduction, the official said it is “not meant to be overly precise,” adding that Biden “won’t speak to it as a precise figure.”

“The idea is to give a sense of the magnitude of the relief that could be provided if people heeded all of the president’s calls to action,” she said.

Biden’s press secretary dismissed skepticism of the tax holiday as a “gimmick,” as Barack Obama called it while running for president in 2008. Speaking to reporters Tuesday, Karine Jean-Pierre said Biden was simply answering reporters when he said over the weekend that the tax holiday was back on the table.

“He was asked a question yesterday, and he answered it,” Jean-Pierre said of Biden.

“He’s going to do everything that he can to make sure that he relieves some pain and pressure that Americans are feeling at the pump,” she added.

Still, the outcomes for frustrated consumers are likely to prove trivial, said Michael McKenna, a Republican energy lobbyist.

“The substantive outcomes of a suspension of the federal gas tax are pretty clear — the wholesalers, the retailers, and the consumers are going to split the benefit in some fashion. So consumers might see as much as a nickel reduction per gallon,” McKenna, a White House official during the Trump administration, told the Washington Examiner. “Not nothing but not much either.”

Worse, the slight reprieve would push demand while doing little to increase supply.

“Consumers will barely notice it,” said Bob McNally, a former energy official in the Bush administration. “The degree the consumer does benefit, it would only support demand, which is keeping prices high.”

Revenue from the gas tax helps fund the Highway Trust Fund, which pays for improvements to roads and bridges and is already short on funding. Suspending the tax would sap the fund.

Xan Fishman, energy policy director at the Bipartisan Policy Center, said eliminating the gas tax would do more harm than good.

“It’s much better to have your infrastructure in a state of good repair and pay a small gas tax than it is to lose that gas tax and have bad roads that mess up your car,” Fishman said.

Speaking to reporters, the White House said Tuesday it would seek alternative funding to replace the lost revenue.

Fishman argued that the administration should be looking toward sustainable long-term policies to support its energy transition goals.

“We need to think of our energy policy in such a way that we can drive decarbonization while at the same time making sure that we have energy security and energy affordability,” Fishman said. “Any policy that’s doing one of those things but not all of those things is going to lead to a bad place.”

A senior administration official insisted Tuesday that the decision was “not a stepping back” from Biden’s climate or
green energy
transition goals.

“We are walking and chewing gum just as I think the American people would expect an administration to do,” a second official said.

But it’s not just gas weighing on household budgets. Inflation is running at a four-decade high, and prices for consumer goods and services in May rose 8.6% compared to the previous year, according to the latest government price data. And a stock market sell-off is spooking people’s anxiety about the economy’s direction.

Looming over this is the
midterm elections
with Democrats poised to lose seats in both chambers of Congress.

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McKenna said Biden’s push would do little to solve the supply shortage and suggests a president more interested in spurring a green energy transition through high fossil fuel prices. “Similarly trivial” are the political outcomes for Biden, he said.

“The president has no intention of doing what needs to be done here — rejecting notions of net zero, the bans on gasoline-powered cars, and the jihad against oil and gas being waged by his own financial regulators,” McKenna said. “The only conclusion that remains is that Team Biden wants high gas prices. Those prices serve their political purposes. All of the rest of this is a charade.”

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