President Joe Biden asked Congress to postpone the federal gas tax in a largely symbolic measure after realizing that lowering pump prices would hurt his party’s chances of winning the next election. m By postponing the 18-cent federal gas tax for the next 90 days, Biden said on Wednesday at the White House, “We can cut the price of petrol and offer them just a little bit of relief.”
He claimed that states should also suspend their own gas taxes because many of them have surpluses in their budgets as a result of the federal fiscal stimulus. Additionally, he exhorted refiners and owners of petrol stations to guarantee that “every penny” of the tax suspension gets to consumers.
Your customers, the American people, badly need relief, Biden continued. “Reduce the pump price so that it accurately reflects the cost of the product. Do it now, as soon as possible. Republicans criticized Biden’s handling of the issue of rising gas prices, and in response, Biden blamed Russia’s invasion of Ukraine for the current increase.
BREAKING NEWS: President Biden to call for a 3-month federal gas tax holiday https://t.co/GM7LgUYQ55
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Are you now denying that we were wrong to assist Ukraine, all of you Republicans in Congress blaming me for the high cost of gas in America? he questioned. Do you mean to say that we made a mistake by refusing to succumb to Putin? Do you mean that we would choose Putin’s tight control over Europe over lower gas prices in the US?
The average national price of regular unleaded has climbed by over 38% since Russia’s invasion of Ukraine on February 24, according to statistics from the auto club AAA provided by Bloomberg.
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Biden went on, “I comprehend the swift politics of the assault. But the simple fact is that gas prices have climbed by about $2 per gallon as a result of Vladimir Putin’s ruthless assault on Ukraine. He wouldn’t get away with it, not with us.
He then neglected to respond to inquiries after his remarks. The president is urging a decrease in fuel prices, which have become a political albatross as the November midterm elections draw near. Obama had authorized the release of millions of barrels of oil from the Strategic Petroleum Reserve with little effect on pump prices and prods oil companies locally and abroad to open the production taps.
His Wednesday appeal to Congress, however, was virtually ineffective, underscoring the extent of his power. Biden’s deteriorating popularity is unlikely to convince the states to act if they haven’t already since there is little willingness in Congress, even among Democrats, to stop the collection of the gasoline tax.
“The basic line is that this is just kind of another rhetorical weapon of the White House to sort of show that they’re doing everything they can on inflation,” said Libby Cantrill, head of public policy at Pacific Investment Management Co., on Bloomberg Television on Wednesday.
Additionally, Biden’s stance is rife with policy contradictions: he has previously supported cutting US oil production while now supporting its expansion; lowering gasoline prices would stimulate more consumption, which would be at odds with his efforts to reduce the US’s dependency on fossil fuels.
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Delaying the fuel tax may also have the unintended consequence of driving up prices even more. According to a Biden adviser, it wouldn’t be possible if the crisis in Ukraine didn’t exist. This is not a proposal that you push for constantly, Biden aide Gene Sperling said on Bloomberg Radio on Wednesday.
There have probably been many times when I’ve said, “Hey, we don’t need to do that; instead, let’s think about what the situation is right now.” Instead, Biden is making the appeal as part of a persistent rhetorical push to blame Republicans for congressional inaction as he draws sharper contrasts ahead of the November elections.
Republicans in Congress who today criticized me for the expensive gas in America, are you now claiming that we were wrong to support Ukraine? Biden questioned. Do you mean to say that we made a mistake by refusing to succumb to Putin? Do you mean that we would choose Putin’s tight control over Europe over lower gas prices in the US?
Biden asked for a three-month suspension of the federal gas tax and diesel fuel tax, both of which are 24 cents a gallon, from now through the summer. That would be in addition to any sanctions imposed at the state level. The suspensions, according to aides, would bring down petrol costs by 50 cents a gallon when combined.
The national average for the US is currently very near to records, hovering around $5 per gallon. State-level initiatives draw attention to the likelihood of ensuing price hikes. Some states that postponed their own fuel taxes saw prices return higher than they would have without a suspension, according to research by the Wharton School at the University of Pennsylvania.
The majority of economists are sceptical that a gas tax suspension will have the desired outcome. When there is a limited supply, reducing the price could boost demand, which might lead to higher pricing. Professor Jason Furman of Harvard University, the former chairman of the Council of Economic Advisers, argued on Twitter that providers rather than consumers will benefit most from the tax cut.
The substantive basis for the programme is poorer than ever, according to a paper released on Wednesday by Tobin Marcus, senior US policy strategist at Evercore ISI. The paper claims that “subsidising demand amid a supply crunch would be counterproductive,” that “the extent of the tax drop compared to pump prices is negligible,” and that “higher refinery utilization suggests more of the benefit would be taken by producers instead of consumers.”
Marcus stated that it “suggests that few new ideas are emerging” because it took months for MPs to determine whether or not to endorse a plan that had been put up earlier in the year. The best strategies to lower gas costs, according to retired Federal Reserve economist Claudia Sahm, are to reduce demand and increase supply.
She claims that the gas tax holiday is “slightly gimmicky, would have a negligible influence on gasoline prices, and would considerably stimulate demand.” She went on to say that “every ten cents count,” and that “the holiday would at least knock down the pricing on the gas station signage a little.”