Gas prices reached a national average of $5.01 last week, with all states reporting gas prices of at least $5 per gallon. In places like California, however, gas is nearly $10 per gallon, particularly in major metropolitan areas like Los Angeles.
As of this writing, the national average price for a gallon of gas is $4.97.
Americans are frankly worried about their financial bottom line, regardless of their political affiliation. One elderly lady told a Fox News reporter last week that she basically worked to eat and (buy gas to go) to work. Another driver said he had filled up his van for about $150. Both individuals reiterated the same idea – financially, they could not sustain the rising cost of gas, among other rising prices.
This weekend, President Joe Biden was in Rehoboth Beach, Delaware. Reporters approached the president and discussed the idea of establishing a gas tax holiday in order to ease at least some of the pain at the pump Americans are feeling. Currently, the federal gas tax amounts to 18.3 cents per gallon.
“Yes, I’m considering it. I hope to have a decision based on the data – I’m looking for by the end of the week,” President Biden told reporters on the beach.
The gas tax holiday is just the latest idea being floated to provide some type of relief to consumers. Rumors abound that some legislators also proposed a gas rebate for Americans, but no details can be found on this alleged proposal.
So far, the Biden Administration has authorized a release of one million barrels per day from the Strategic Reserve and a change to the way ethanol is blended so that gas prices can be lowered. Last week, the White House sent a letter to oil refineries demanding that the increase refining capacity.
The American Petroleum Institute as well as the American Fuel and Petrochemical Manufacturers drafted a letter in response to Biden’s call to open up refineries. The letter remarked that refineries are “already operating close to their maximum capacity,” and that because so many facilities are being converted to renewable energy production, the refineries can only process so much fossil fuel products.
At the same time, the Biden Administration has blamed oil companies for the price hike; he’s also blamed the Russian invasion of Ukraine for the high fuel prices.
So, would a gas tax holiday help American drivers? Even though the federal excise tax on fuel is eighteen cents (for regular gas; for diesel, it’s about 24 cents), that’s not the $2 per gallon gasoline Americans became accustomed to just eighteen months ago. However, a person purchasing ten gallons of fuel would save $1.80 – $2.00 per purchase, and for those who commute or drive for a living, this adds up.
A Penn Wharton Budget Model showed that gas tax holidays in the states of Connecticut, Maryland, and Georgia provided some savings to consumers. What’s more, the savings went straight to the pockets of the consumer rather than to service stations.
Even Janet Yellen, the current Secretary of the Treasury, has advocated for a gas tax holiday.
Ironically, Barack Obama, Joe’s former boss, said in 2008 that a gas tax holiday is merely a “gimmick.” Obama was campaigning for president when he made this comment. Obama said at the time that Americans couldn’t be sure that oil companies would “pass on the savings” to the consumer. This would appear to conflict with what the Penn Wharton model supports.
Biden said that his staff is set to meet with CEOs of the major oil companies this week to discuss how to lower prices at the pump across the country.
Oil companies – along with many Americans on both sides of the aisle – are encouraging the president to relax constraints on drilling permits as well as open up more federal lands for drilling. The Biden Administration has repeatedly accused the oil companies are sitting on permits, but earlier this year, the Department of the Interior cancelled permits in Alaska and on the Gulf Coast.
