The Democratic president also called on states to suspend their own gas taxes or provide similar relief, and publicly criticized the energy industry for prioritizing profits over production. It will take action by lawmakers in Washington and government buildings across the country to really relieve consumers. “It does not reduce all the pain, but it will be a great help,” Biden said, using the bully’s pulpit when his government believes it has run out of direct leverage to deal with rising gas prices. “I do my part. “I want Congress, the states and industry to do their part.” The issue is the federal tax of 18.4 cents per gallon on gas 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% on the pump when prices average around $ 5 a gallon nationwide. Biden’s push faces unfortunate odds in Congress, which must act to suspend the tax, and where many lawmakers, including some in his own party, have expressed reservations. Even many economists are skeptical of the idea of a gas tax holiday. House Speaker Nancy Pelosi gave a non-binding response to Biden’s proposal, saying she would look to see if there was support for it in Congress. “We will see where the consensus is on a way forward for the president’s proposal in Parliament and in the Senate,” Pelosi said. In his speech, Biden linked high energy prices to the Russian invasion of Ukraine and said, “Defending freedom, defending democracy would not be without cost to the American people and the rest of the free world.” The president noted that lawmakers have backed sanctions against Russia and aid to Ukraine despite the risks of inflation posed by energy and food shortages. Democrats, Republicans and independents in Congress have chosen to support Ukraine, “knowing full well the cost,” he said. “Well, for all those Republicans in Congress who are criticizing me today for high gas prices in America: Are you now saying that you made a mistake by supporting Ukraine?” said Biden. “Are you saying we have lower gas prices in America than (Russian President Vladimir Putin)’s iron fist in Europe?” I do not believe that. ” The president said “states are now in a strong position to be able to afford some of these actions”, thanks to federal support from the 2021 COVID-19 relief bill. But there is no guarantee that states will use their budgets to suspend their gas taxes or offer discounts to consumers, as Biden is calling for. Barack Obama, during the 2008 presidential campaign, called the idea of a gas tax holiday a “trick” that allowed politicians to “say they did something.” He also warned that oil companies could offset tax cuts by raising their prices. Administration says federal and state gas tax suspensions, as well as energy companies channeling their profits to production capacity and refining, could cut gas prices by $ 1 a gallon. High gas prices pose a fundamental threat to Biden’s electoral and political ambitions. They caused the confidence in the economy to fall to low levels, which are badly foretold for defending the democratic control of the Parliament and the Senate in November. Biden’s previous attempts to cut gas prices – including the release of oil from the US strategic stockpile and more ethanol blending this summer – have not resulted in savings in the pump, a risk that carries with it the idea of a tax holiday. gas. The president can do very little to set the prices set by world markets, for-profit companies, consumer demand and the aftershocks of the Russian invasion of Ukraine and the ensuing embargo. The underlying problem is the lack of oil and gas refineries, a challenge that tax breaks may not necessarily address. Mark Zandi, chief economist at Moody’s Analytics, estimates that most of the 8.6% inflation seen in the last 12 months in the US comes from higher commodity prices due to the Russian invasion and ongoing coronary heart disease. “In the immediate, short term, it is crucial to stem the rise in oil prices,” Zandi said last week, pointing out that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help boost supplies. and in reducing prices. Republican lawmakers have blamed Biden, saying it has created a hostile environment for domestic oil producers, keeping production below pre-pandemic levels. Senate Republican leader Mitch McConnell ridiculed the gas tax holiday as an “ineffective ploy” in a speech Wednesday. “The big new idea of this ineffective government is a silly proposal that senior members of their party have already rejected much earlier,” he said. Spokesman Peter DeFazio, the Democratic chairman of the House Transport and Infrastructure Committee, said he would not support the suspension of the gas tax. “I will work against him. “I have the largest committee in Congress, so we’ll see.” DeFazio said a better course would be to tax oil companies for “unexpected profits”. House Majority Leader Steny Hoyer, D-Md., Said he would consider the proposal because it was proposed by Biden. “What I’m not sure about is whether it will actually have the desired effect on the retail price, or whether we will actually save money from the consumer,” Hoyer said. “Do I think we have the votes? We have not counted, so we do not know yet. “ Administration officials said the $ 10 billion cost of the gas tax holiday would be paid for and the Highway Trust Fund maintained throughout, even though gas taxes are a major source of revenue for the fund. Officials did not identify new sources of revenue. The president also called on energy companies to accept lower profit margins to increase oil production and refining capacity for gasoline. This has increased tensions with oil producers: Biden has argued that companies make “more money than God”. This sparked a series of events in which Chevron chief Michael Wirth sent a letter to the White House saying that the government “sought to greatly criticize and at times discredit our industry.” Asked about the letter, Biden said of Wirth: “He is a little sensitive. “I did not know they would be hurt so quickly.” The energy companies are scheduled to meet with Energy Secretary Jennifer Granholm on Thursday to discuss ways to boost supply.
Associated Press writers Lisa Mascaro, Matthew Daly and Kevin Freking contributed to this report.
