Biden Administration Calls For Gas Tax Holiday

Gas prices have been rising for months with no relief in sight. With the Biden Administration becoming increasingly desperate to assuage the public, the President has asked Congress to suspend the federal gas tax for three months to take pressure off consumers. Will it work? 

“President Biden understands that high gas prices pose a significant challenge for working families,” the White House said in a statement. “Today, he is calling on Congress and states to take additional legislative action to provide direct relief to American consumers who have been hit with Putin’s Price Hike.”

While a suspension of the 18.4 cents federal gas tax will bring down the cost of a gallon of gas, there are more costs to consider. For instance, the gas tax funds highway infrastructure. A three-month pause will cost the Highway Trust Fund $10 billion in lost revenue. President Biden is calling for the revenue to be replaced with other federal funding so that road projects will continue. Experts are skeptical, however. 

“Designed to curry favor with voters, gas tax suspensions put transportation projects at risk if the lost revenue is not backfilled from other sources,” says the American Road & Transportation Builders Association.

In addition to suspending the federal gas tax, President Biden is calling on states to suspend their own taxes on fuel. Some states, such as Georgia and Florida, have already pressed pause on gas taxes, and others, like Alabama, are sharply against any such tax holiday. 

The President’s plan faces significant opposition in Congress, even from his own party. Speaker of the House Nancy Pelosi has questioned whether the savings will even make it to consumers since stations are under no obligation to pass them along. Even Larry Summers, former Treasury secretary in the Clinton administration and an economic adviser for President Barack Obama, called it “a gimmick” that doesn’t solve the underlying issues.

A gas tax holiday isn’t inherently a bad idea. With prices in general rising, it makes sense to offer consumers some relief. But even if Congress takes Biden’s suggestion, gas prices will simply increase again in three short months. It makes more sense for the Biden Administration to fix the core issues causing prices, especially gas prices, to rise in the first place. 

How can we do that? 

A change in tone from the Biden Administration could go a long way toward healing the uncertainty and pessimism toward the energy sector sown by the Administration. For example, instead of setting the stage to ramp up U.S. oil and gas production, the president has repeatedly shopped for energy supplies elsewhere, including Venezuela and Saudi Arabia. He’s also canceled lease sales. No one can blame America’s energy industry for being apprehensive about making new investments under an unfriendly Administration that’s all but vowed to end oil and gas in favor of renewables. 

The president could quickly open federal lands for new oil and gas leases and support new energy infrastructure such as pipelines and LNG terminals, both of which would increase our ability to transport supplies to American and foreign markets. These measures could go a long way toward fixing underlying supply issues. 

We’re glad to see the President take high gas prices seriously, but suspending gas taxes isn’t enough to solve the problem. We must invest in our own energy supplies and infrastructure to ensure that a crisis like this never happens again.