It also urges states to suspend their own gas taxes or provide similar relief, the White House said. The White House said in a statement: “The price of gas has risen dramatically around the world, to almost $ 2 a gallon in the United States, since Putin (Russian President Vladimir Putin) began mobilizing troops on the border with Ukraine. ». 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 at average prices around $ 5 a gallon nationwide.
However, many economists and lawmakers from both parties are skeptical of the idea of ​​a gas tax holiday. Barack Obama, during the 2008 election campaign, called the idea a “trick” that allowed politicians to “say they did something.” He also warned that oil companies could offset tax cuts by raising their prices. High gas prices pose a fundamental threat to Biden’s election 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.
The president’s previous efforts to cut gas prices – including the release of oil from the US strategic stockpile and more ethanol mixing this summer – did little to save resources at the pump, a risk that carries the idea of ​​a tax holiday. natural gas. Mr Biden acknowledged that gas prices had dampened public sentiment as he tried to convince people that the United States could still turn to a clean energy future. In an interview with the Associated Press last week, he described a country already suffering from some of the psychological scars from the coronavirus pandemic that are now worried about how to afford gas, food and other necessities. “If you look closely, until gas prices start to go up,” Biden said, “things were much more, they were much more optimistic.” 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 sought to impose more blame on the president, saying he has created a hostile environment for domestic oil producers, keeping production below pre-pandemic levels. Senate Republican leader Mitch McConnell scoffed at the idea of ​​a gas tax holiday in a February speech. “They have spent a whole year waging a holy war on affordable American energy and now they want to use a lot of taxpayer money to hide the consequences,” he said. Democratic House Speaker Nancy Pelosi has also expressed doubts about the value of the tax suspension in the past. In late April, when asked about the possibility of a federal gas tax holiday, he replied: “The advantages are that it is good PR” and then added: “The disadvantages are that there is no guarantee that the savings – the reduction of the Federal tax “It will be passed on to the consumer. We did not have any evidence that oil companies would pass it on to the consumer.” He also told reporters: “We have to pay for it.” The funds for such a tax holiday would come from the Highway Trust Fund, he said, “and we can not have this deficit there.”
“The question is,” he said at the time, “is it worth going to get money, to come back to cover the deficit and the trust fund, to take a break from the big oil companies?” Administration officials say the $ 10 billion cost of the gas tax holiday will be paid for and the Highway Trust Fund will be retained in full, 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 escalated tensions with oil producers: Mr Biden said companies were making “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, Mr Biden said of Wirth: “He is slightly 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. However, the White House said on Wednesday that “the United States has already produced more oil in the first year of this administration than in the first two years of the previous administration, and they are well on their way to setting a new record next year.” year. “ Rebecca Kaplan contributed to this report.