President Joe Biden announced he is exploring a federal holiday on the gasoline tax, which could save customers up to 18.4 cents per gallon the Associated Press reported Monday.
“I hope to have a decision based on the data — I’m looking for by the end of the week,” he told reporters.
The gas tax consists of 18.3 cents in excise tax and a 1 cent in a storage fee. The cost of diesel is 24.3 cents plus a 1 cent fee.
The national average for a gallon of gas is $4.98 according to the American Automobile Association. The states with the largest increases in average price during the past week include: Montana (+18 cents), Nebraska (+15), Missouri (+13), Wyoming (+13), South Dakota (+13), Arizona (+12), North Dakota (+11), Oklahoma (+11), Colorado (+11) and Florida (+10).
The move comes as gasoline demand declined slightly last week from to 9.09 million barrels per day from 9.2 million barrels per day. If economic growth contracts as interest rates rise, demand could slip further, easing gas prices somewhat.
Prices began climbing last year as a pandemic-induced production slowdown caused oil supply shortages. Yet refiners have yet to catch up with demand once the world economy rebounded. Prices then shot up significantly after Russia’s February invasion of Ukraine.
Biden’s actions so far
The Biden administration already announced the release 1 million barrels of crude oil a day for six months from the Strategic Petroleum Reserve, with 90 million barrels released between May and August. Biden also ordered increased ethanol blending for the summer.
The President also slammed seven major oil refiners in a letter to them, accusing them of making record profits from record high gas prices.
“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” he wrote. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable. He also wrote, “I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply.”
Refiners responded by saying they are running at 94% of capacity, and that high prices are the result of global market pricing, operating at or near maximum capacity utilization, and capacity losses due to conversions to renewable fuel production. They also state that even if more refining capacity is brought online, demand would still increase, as would prices.
Nothing has stopped rising prices
None of his actions have impacted the skyrocketing cost of fuel. But the Federal fuel tax helps pay for federal road projects, a clear imperative of this administration.
For their part, refiners say that more domestic production is needed.
“To protect and foster U.S. energy security and refining capacity, we urge to you to take steps to encourage more domestic energy production,” they wrote in their response to Biden.
Oil prices rose have more than doubled since he came into office, standing at $113 today.
The rising prices have put Biden in a tough spot, leaving him open to criticism from all sides. Democrats see pumping more oil as abandoning his environmental promises, while Republicans blame his actions for exacerbating oil shortages.
But once the finger pointing has stopped, one thing will remain: high gas prices at the pump.