President Biden is expected to call on Congress to suspend the federal gas and diesel taxes for the next three months, the latest effort by the White House to provide relief to Americans struggling with record-high gasoline and diesel prices. The move is contingent on legislative action, which would temporarily lift the 18.3 cents tax per gallon on gasoline and 24 cents tax per gallon on diesel during the summer months.
The three-month timeframe was specifically to address the surging gas demand during the summer months when travel increases. In the longer term, however, a Biden administration official acknowledged the revenues from the tax are a vital source of infrastructure funding.
Biden will lay out the proposal in a speech from the White House this afternoon when he will also call on states to suspend their gas taxes or provide rebates or other forms of relief, the official said. Additionally, Biden is expected to call on oil refinery companies to take steps to boost production.
Biden will also ask Congress to replenish the Highway Trust Fund, which is supported by gas taxes, with other revenue to make it “whole” amid a gas tax suspension. The White House estimates it would take about $10 billion to do so. That may be a way to garner some additional Democratic votes for the gas and diesel tax suspension.
Energy Secretary Jennifer Granholm is separately holding a meeting with oil executives on Thursday to discuss ways to reduce gasoline and diesel prices, after Biden sent a letter to seven major companies demanding they take action to help lower costs for consumers. Executives from Exxon Mobil, Shell, Valero, Marathon, Phillips 66, BP and Chevron are slated to attend the meeting, the White House said.
Impact: When some states opted to suspend their own fuel taxes in the past, sometimes prices came back higher, according to a study released last week from the Wharton School at the University of Pennsylvania.
American drivers are starting to buy less gasoline as they feel the economic burden of record prices that continue to hover near $5 a gallon. In the first full week of June, gasoline sales at U.S. stations were down about 8.2% compared with the same week last year — the 14th consecutive week that sales have lagged behind 2021 levels, according to surveys by energy-data provider OPIS. In the week ended June 10, the Energy Information Administration’s measure of implied demand — an estimate of products supplied to consumers — declined by roughly 110,000 barrels a day from the prior week, to about 9.1 million barrels a day. That figure is down from about 9.4 million barrels a day the same time last year.
The WSJreports (link) that drivers have begun consolidating trips or filling up their tanks with only as much fuel as they need to get by for a few days. Some are carpooling or taking mass transit, while others are working from the office for fewer days each week.
