The president also asked oil companies to pass on the savings to consumers.
As expected, President Biden has declared on June 22 that he wishes Congress to pass a federal holiday of the gas tax for this summer extending to 90 days. This three-month forelock extension on the gas tax is certainly a welfare gesture keeping the people in mind.
He has also made the same appeal to individual states to approve similar relief. He went to the extent of asking the oil companies as well as gas station attendants to pass the entire reduction in price to consumers. “The time for war has come for the companies setting the price at the pump,” President Biden continued in an ardent effort to transmit the urgency to the pump owners, telling them, “Do it now. Do it today.”
As per The New York Times, Biden made an additional remark that the relevant reserves had been tapped to further increase the supply of fuel, and major oil companies then needed to experiment with additional supplies while also producing more gas. “The bottom line is that oil companies have been setting records in the extraction of crude oil. The issue is refining that oil of the gas into the pump.”
The price of national gas has increased to $4.97 for a gallon. Around a quarter of this total, no more than 3.7%, is due to the federal government’s 18.4-cent-per-gallon gasoline tax. Vice President Joe Biden said he is open to temporarily suspending the collection of this tax if states agree to contribute more revenue and help ease the burden of residents who must pay higher taxes. Biden is likely to have the support of both the House and Senate on this issue, as The Hill reported on Monday. “Yes, I’m considering it,” Biden addressed reporters Monday. “I hope to have a decision by the end of the week based on the data.”
There isn’t a great deal that a President, a leader, can do to rapidly affect the cost of a liter of gasoline. Biden has already released a significant amount of strategic petroleum supply to the market, and evaluations are scheduled to be held in reaction to the news from chief executives of major oil firms this week. Administration members are scheduled to meet with the heads of different companies to discuss the increase in gas prices later this week. President Biden is planning to travel to Saudi Arabia next month and the energy supply throughout the world and his thoughts thereon will be the subject of the upcoming discussion.
Unfortunately, Saudi Arabia cannot be forced to make additional energy, and although oil supplies are limited as a result of sanctions over the recent annexation of Crimea, a gas tax holiday could at least show some form of activity which would be at least a partial way to deflect the political spotlight. Of course, it must involve further Congressional approval; otherwise, this would not really be fair. But it could have a significant impact on its outcome.
To clarify, the key driver of gas prices is the federal gas tax that it fully depends on. Once you stop paying the gas tax, your gas consumption will gradually decrease. So what could annulling the federal gas tax brings for normal drivers? (State gas taxes are a quite diverse affair and of substantially varying amounts.) Assuming your annual gas usage is in the vicinity of 13.5K miles, you’d experience a savings of about $100 if you were able to pause the gas tax. U.S. drivers in their vehicles get 27.35 miles a gallon on average, totaling 13.5K miles per year which mean nothing more than a yearly burning of 494 gallons.
The following can clarify more on this heated topic.
An extra 18.4 cents less for a gallon of gasoline when prices decline by that amount annually will save the consumer roughly $91. So the full reduction in price cascades all the way down to the service station and gasoline distributors as well.
Biden must deal with the fact that reducing the gas tax won’t exactly solve drivers’ problems with traffic. Actually, before Biden, President Obama publicly opposed eliminating the gas tax. During Barack Obama’s presidential campaign, both Hillary Clinton and John McCain were in favor of such a move, so he famously said that reducing the tax is a breeze.
Obama tried to persuade the onlookers by saying, “We’re arguing over a claim you think you might get away with asserting which is unquestionably going to cost people almost half of an entire tank of gas over the course of the entire summer.” He added that by doing this they could earn admiration from everyone in Washington. Contrary to that, earlier this year, when rumors of a gas tax holiday first surfaced in Washington, senator Mitch McConnell echoed Obama’s words by saying he considered it a gimmick.
The last time the federal tax for gasoline was increased by the federal government was in 1993, and we frequently argue in congress that 18 cents per gallon of fuel currently isn’t enough to sustain efficiently maintained roadways and bridges (federally approved tax diesel of fuel is 24.4 cents). There have been discussions in Congress about increasing the federal gas tax early on in the tenure of President Joe Biden, but the reality is a far cry from those discussions today.