Biden calls for three-month suspension of federal gas tax but faces ...

Washington (CNN) President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes until the end of September, framing the move as necessary to provide relief to American consumers but itself not enough to resolve the problem of surging energy prices.

Biden's decision to call for a federal gas tax holiday -- a move once derided as a gimmick by Barack Obama and viewed skeptically by leading economists -- almost certainly won't make it through Congress, especially as it faces blowback from the President's own allies on Capitol Hill. House Speaker Nancy Pelosi stopped short of endorsing the plan in a statement after Biden's remarks.

But he cast the move as a way to give some relief to families as he tries to find solutions to one of his top political problems.

"By suspending the 18-cent gas tax, federal gas tax for the next 90 days, we can bring down the price of gas and give families just a little bit of relief," Biden said in a speech from the White House.

"I fully understand that a gas tax holiday alone is not going to fix the problem," he continued, "but it will provide families some immediate relief, just a little bit of breathing room as we continue working to bring down prices for the long haul."

Biden also called on states to take steps removing their own taxes on gas and diesel. And he told oil refining companies to increase their capacity ahead of their planned meeting this week with administration officials.

Combined, Biden claimed, the wish list could reduce the price per gallon of gas by $1. Yet that figure relies on a number of steps entirely out of the President's control -- not least of which is convincing a skeptical Congress to approve his plan.

In her statement after Biden's remarks, Pelosi did not commit to bringing a gas tax holiday up for a vote.

"We will see where the consensus lies on a path forward for the President's proposal in the House and the Senate," she wrote.

The steps amounted to Biden's latest attempt to show he's taking initiative in reducing fuel prices as Americans grow more frustrated by the financial burden. White House officials had been considering a gas tax holiday for months, but held off until now in part because of concerns at how it might be received in Congress.

Republicans widely oppose lifting the gax tax. Even some Democrats -- including President Barack Obama on the campaign trail in 2008 -- have cast a gas tax holiday as a "gimmick."

Yet facing growing anger and the start of the summer driving season, Biden determined that even small steps bordering on symbolic are worth taking.

"In the conditions that we are in today, that's not a gimmick, that's a little bit of breathing room for the American people as we get into the summer driving season," said Amos Hochstein, senior adviser for energy security at the State Department, in an interview on CNN's "New Day" Wednesday morning.

The current federal tax on gas is about 18 cents per gallon, while the federal tax on diesel stands at 24 cents per gallon. Even if savings from lifting those taxes were passed directly to consumers -- which isn't guaranteed -- the savings for one fill-up could only be a few dollars.

Even some Democrats have cast doubt previously on a gas tax holiday , noting that the tax provides an important source of funding for road construction. Officials said Biden would call for using other revenue sources to make up for the shortfall, and he worked to allay some of those concerns in his speech.

He also sought to use the occasion to explain his decisions that have contributed to higher gas prices. The President defended banning Russian energy imports to the US after Russian President Vladimir Putin invaded Ukraine -- a move Biden acknowledged at the time would raise gas prices. Imports from Russia make up a small slice of the American energy portfolio, roughly 8% in 2021, of which only about 3% was crude oil.

"We could have turned a blind eye to Putin's murderous ways, and the price of gas wouldn't have spiked the way it has. I believe that would have been wrong," Biden said. "I believed then and believe now that the free world had no choice."

Economists skeptical

Some economists also say that the savings passed along to consumers could be minimal as retailers simply raise the base price of gas to make up the difference.

"Whatever you thought of the merits of a gas tax holiday in February, it is a worse idea now," Jason Furman, a senior economic official in Obama's administration, wrote on Twitter. "Refineries are even more constrained now so supply is nearly fully inelastic. Most of the 18.4 cent reduction would be pocketed by industry -- with maybe a few cents passed on to consumers."

Senior administration officials have acknowledged that criticism, but said Biden would pressure companies to pass along the savings.

"There's no time now for profiteering," Biden said, adding later that energy companies must increase refining capacity to produce more gas for American consumers and bring down prices.

"To the companies running gas stations and setting those prices at the pump -- this is a time of war, global peril, Ukraine. These are not normal times," he said. "Bring down the price you are charging at the pump to reflect the cost you are paying for the product."

Yet even there, quick action seems difficult. Refining capacity that was cut during the Covid-19 pandemic would take months to get back online, and refineries now are running at nearly 90% of their capacity.

Biden looks for scapegoats

The President has turned up the heat on oil and gas companies in recent weeks as gas prices have shot up, with the national average climbing above $5 per gallon at one point last week.

Biden has made Russia's war in Ukraine his top scapegoat for climbing gas prices but has also called out oil and gas companies, saying they aren't doing enough to bring down costs and accusing them of profiting off the war. He repeated some of those arguments on Tuesday, saying the country needs "more refining capacity."

"This idea that they don't have oil to drill and to bring up is simply not true," he said.

In response to the President's criticisms, the oil industry has largely said that it is the Biden administration's fault that prices are so high because of what they perceive as limits on domestic oil and gas production.

Chevron CEO Mike Worth said in a letter on Tuesday that Biden should stop criticizing the oil and gas industry and called for a "change in approach" from the White House.

"Your Administration has largely sought to criticize, and at times vilify, our industry," Worth wrote in an open letter to Biden. "These actions are not beneficial to meeting the challenges we face and are not what the American people deserve."

Biden responded later in the day: "He's mildly sensitive," adding: "I didn't know they'd get their feelings hurt that quickly."

Gas tax holiday: Biden proposes 3-month break from federal gas tax

Biden's proposal would eliminate a federal tax of 18.4 cents per gallon of gas through September.

The plan would cost $10 billion, but Biden wants to offset the loss of highway revenue.

It's unclear whether the White House has enough support in Congress to pass the gas tax holiday.

WASHINGTON – President Joe Biden called on Congress Wednesday to suspend the federal gas tax for the next three months in one of his administration's most controversial efforts to give Americans relief as gas prices soar above $5 a gallon in many states.

The proposal was met with widespread skepticism. House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and other top Democrats were noncommittal, signaling it could be doomed in Congress.

A three-month federal gas tax holiday would suspend a tax of 18.4 cents per gallon of gas and 24.4 cents for diesel that drivers pay when they fill their tanks. The White House billed the holiday as a way to provide some "breathing room" as it works to bring costs down over the long term. The pause, which Biden envisions lasting through September, would require congressional approval.

"We can bring down the price of gas and give families just a little bit of relief," Biden said, urging companies to pass on "every penny" of the reduction to consumers. "There's no time now for profiteering."

In a speech from the White House, the president also encouraged states and local governments to suspend their gas taxes.

Previously:Biden says he will decide on federal gas tax holiday 'by the end of the week'

Revenue from the federal gas tax supplies the Highway Trust Fund, which is used to pay for transportation and mass transit projects. Biden wants Congress to offset the loss of highway funds – about $10 billion – with other federal tax revenue. The federal government's deficit is down $1.6 trillion this year, Biden said, so the United States can afford to pause the gas tax.

Biden has struggled to rein in historic gas prices amid skyrocketing inflation that has taken a toll on his presidency before the midterm elections in November. Suspending the gas tax is one of the quickest steps he can take to try to ease the pain for drivers. The national average for a gallon of gas was $4.968 on Wednesday, according to AAA, jumping more than $1.50 since Russia's invasion of Ukraine in February.

A federal gas tax holiday, floated over the years but never enacted, has plenty of critics. This week, Larry Summers, Treasury secretary during the Clinton administration and an economic adviser for President Barack Obama, called it "a gimmick" that wouldn't solve the underlying issues causing the price spike.

Your wallet:Biden weighs a gas tax holiday. How much would consumers save?

A statement from the Committee for a Responsible Federal Budget, a nonprofit think tank based in Washington, warned that the holiday could drive up inflation after it ends and that it would deplete transportation funds and reduce only a fraction of the overall historic spike in gas prices. Environmentalists argued a gas tax holiday undermines the goal of moving toward clean energy.

There's no guarantee Biden's gas tax holiday proposal will pass Congress, where Democrats would need 60 votes in the evenly divided Senate to overcome any filibuster from Republicans. Not even Democratic leaders are on board.

“We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate," Pelosi said in a statement.

House Majority Leader Steny Hoyer, D-Md., questioned whether the holiday would provide significant savings for drivers and said he's unsure it has the votes to pass the Democratic-controlled House. "But I also think that trying to get the prices down for consumers at the pump is an important objective," Hoyer said.

Pelosi resisted the idea of a gas tax holiday earlier this year. So did Rep. Peter DeFazio, D-Ore., chairman of the House Committee on Transportation and Infrastructure. On Tuesday, Sen. Tom Carper, D-Del., called the proposal "shortsighted and inefficient," saying it would jeopardize funds used for transportation.

In February, a coalition of Senate Democrats from battleground states – including Raphael Warnock of Georgia, Mark Kelly of Arizona and Maggie Hassan of New Hampshire – proposed suspending the gas tax through the end of the year. Their legislation faced resistance from Republicans who slammed it as a political stunt to help in the midterms. The White House never rallied behind the legislation, which did not advance, but remained open to it publicly.

Biden's dilemma:Pushing fossil fuels to cut gas prices while promoting clean energy agenda

All 50 states, as well as the District of Columbia, impose a gasoline tax, the revenue from which typically pays for transportation and other infrastructure projects. The average state gas tax is about 29 cents nationwide; California pays the highest rate and Alaska the lowest.

The White House wants states, as well as cities that have gas fees, to replicate Connecticut, New York, Maryland and other states that suspended gas taxes this spring amid rising inflation.

More:Biden to release up to 180 million barrels of oil from reserve to drive down gas prices

One common concern raised by critics of a federal gas tax holiday – including Pelosi – is that oil companies will pocket the tax cut. Research suggests that might not be the case.

The Wharton School of the University of Pennsylvania released budget estimates last week showing the majority of cost savings during gas tax holidays that Maryland, Connecticut and Georgia enacted this year went to consumers instead of gas companies or filling stations.

In Maryland, 72% of all tax savings passed to consumers, the study found. In Georgia, it was 58% to 65% and in Connecticut 71% to 87%.

Pain at the pump:While gas prices at $5 a gallon, Biden tells oil companies to cut costs for Americans

The federal gas tax, created in 1932 during the Great Depression, has stayed at 18.4 cents a gallon since 1993.

During the 2008 presidential campaign, then-Sen. Barack Obama opposed calls from Republican Sen. John McCain and Democratic primary opponent Sen. Hillary Clinton to enact a gas tax holiday amid the Great Recession.

“This isn’t an idea designed to get you through the summer," Obama said at the time. "It’s an idea designed to get them through an election.”

Biden also renewed his call for oil companies to increase refinery capacity and output and for retailers to pass savings on to consumers as the price of oil lowers. The president criticized oil company CEOs for collecting $35 billion in profit during the first quarter of 2022 as gas prices spiked. Energy Secretary Jennifer Granholm is set to meet with oil company executives Thursday.

"This is a time of war, global peril, Ukraine," Biden said. "These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product. Do it now. Do it today. Your customers, the American people, they need relief now."

Reach Joey Garrison on Twitter @joeygarrison.

Gas tax holiday likely to land on empty amid Democratic opposition ...

(CNN) President Joe Biden's call for Congress to suspend federal gasoline and diesel taxes will likely land on empty in the Senate.

Even if he can get all 50 Democratic senators behind the legislation, he would still need 10 Republicans to join the cause to advance the measure, which seems extremely unlikely.

Republicans widely oppose lifting the gas tax — even some Democrats, including House Speaker Nancy Pelosi, have been cool to the idea that former President Barack Obama labeled a "gimmick" in 2008 when he was a candidate. Pelosi has previously argued that oil companies could pocket the savings and not pass it onto the consumers.

In a sign of an uphill climb for Biden, moderate Democratic Sen. Joe Manchin of West Virginia, who chairs the Senate Energy and Natural Resources Committee, told CNN's Manu Raju Tuesday evening that he's "a little skeptical" of the gas tax holiday that Biden plans to embrace, saying "there's no guarantee" it will reduce gas prices.

And Sen. Tom Carper, a Democrat from Biden's home state of Delaware, said in a tweet he was "glad" Biden was exploring ideas for gas prices, but added it was a " a shortsighted and inefficient way to provide relief."

With Manchin and Carper sounding opposed, Democrats also would fail if they tried to pass such a measure themselves through a procedure called reconciliation , which would only require 50 votes to advance.

Democratic Whip Sen. Dick Durbin of Illinois told CNN Wednesday he's supportive of the proposal, but he warned that the administration and Congress needed to be "honest" about the effects it would actually have in effectively driving down the cost of gas. He also warned it could affect infrastructure funding, which the federal gas tax supports.

Those most likely to rally behind the political ploy are vulnerable Democrats facing reelection this fall who are taking a beating with voters over the inflated gas prices, among other troubling economic news.

Democratic Sens. Maggie Hassan of New Hampshire and Mark Kelly of Arizona -- facing heated reelection bids in swing states -- introduced a bill to suspend the federal gas tax back in February, but Senate Democratic leadership hasn't made any moves to advance the measure.

Senate Democrats largely hesitated to embrace Biden's push for a gas tax holiday. They acknowledged the President has few options to ease inflationary burdens but warned the policy might not yield the desired results.

Some Democrats, however, have reluctantly said they would embrace the policy. Sen. Chris Coons of Delaware, one of Biden's closest allies in the Senate, said he knows gas prices is a concern for Biden, so "I'm willing to embrace his proposals for a gas tax holiday." He noted, however, he wasn't sure it has the support to pass the Senate.

"What I hear from Delawareans is that the price at the pump is causing a lot of pain for working families," Coons said. "That's something I know the President is concerned about and sensitive to and I'm willing to embrace his proposals for a gas tax holiday. I don't know whether it will get the votes it needs here in the Senate, but I am talking to my colleagues about that."

House Majority Leader Steny Hoyer told reporters on Wednesday he and House Speaker Nancy Pelosi have "reservations" about a gas tax holiday.

"Pelosi, myself, we've all expressed reservations about it," Hoyer said. "But the President of the United States proposed it. We'll look at it."

Hoyer said that although he supports what Biden is trying to do, he is worried that such a provision would hurt consumers.

"The question is, if you reduce the tax, does it endure to the benefit of the consumer? That's the real key," Hoyer said.

This story has been updated with additional developments Wednesday.

Daniella Diaz
Annie Grayer
Lauren Fox
Sarah Fortinsky

Gov. Whitmer calls on Congress to suspend the federal fuel tax

LANSING – Gov. Gretchen Whitmer joined five other Democratic governors Tuesday in calling on Congress to suspend the federal fuel tax as a way of addressing record-high gas prices.

Whitmer joined the governors of Wisconsin, Minnesota, Colorado, New Mexico, and Pennsylvania in writing to the four leaders of the U.S. House and Senate from both parties about suspending the federal fuel tax of 18.3 cents a gallon on unleaded gasoline, until 2023.

But Whitmer is not calling for suspension of the state fuel tax of just over 27 cents per gallon, spokesman Bobby Leddy said.

"Right now, the best way to bring down the price of gas without impacting our ability to fix the damn roads is by suspending the federal gas tax," Leddy said.

More:Michigan gas prices set new 2022 record — and they're likely to keep climbing

More:Michigan gas prices likely to keep climbing: Here's why — and how you can save

Suspending the federal tax is proposed in the Gas Prices Relief Act, which is supported by several Michigan members of Congress. The average price of unleaded fuel in the U.S. is now at historic levels of about $4.17 a gallon, and rising.

Suspending the tax "would alleviate the consumer cost of rising gas prices while protecting the federal government’s capacity to make infrastructure investments," the governors said in the letter.

That's because the federal legislation would authorize the U.S. Department of Treasury to transfer general fund dollars to replace the lost fuel tax revenue, the governors said. The governors also noted that the recent Infrastructure Investment and Jobs Act championed by President Joe Biden dedicated an additional $118 billion to the Highway Trust Fund, used to maintain federal highways and bridges.

Signing the letter along with Whitmer were Wisconsin Gov. Tony Evers, Minnesota Gov. Tim Walz, Colorado Gov. Jared Polis, New Mexico Gov. Michelle Lujan Grisham, and Pennsylvania Gov. Tom Wolf.

In addition to the state fuel tax, Michigan, unlike many states, also applies its 6% sales tax to gasoline sales.

Former Detroit Police Chief James Craig, a Republican candidate for governor, on Monday called on Whitmer to suspend the state gas tax. Such an action would likely require approval from the Legislature.

The federal fuel tax has not increased since 1993.

Michigan passed legislation in 2015 that increased its 19-cent-per-gallon fuel tax by 7 cents per gallon. That 7-cent increase is partially indexed to inflation, so it can increase over time.

Preya Samsundar, a spokeswoman for the Republican National Committee, said Whitmer's "posturing about a federal gas tax holiday" is "a slap in the face to Michiganders who live under the constant threat of rising energy prices as a result of her campaign to shut down Line 5" — an Enbridge line that carries crude oil and natural gas liquids across the environmentally sensitive Straits of Mackinac.

Studies differ on what impact a Line 5 shutdown would have on Michigan fuel prices. Though it delivers propane to the Upper Peninsula and crude oil to refineries in southeast Michigan and northern Ohio, Line 5 mostly carries Canadian product to Canadian markets.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter.

Become a subscriber.

Federal gas tax holiday aims to ease prices at the pump, but how ...

President Biden is calling on Congress to suspend the federal gas tax through the end of September.

It's not clear how much of the 18.4 cents in tax savings will be passed along to consumers.

One report that looked at state gas holidays found up to 72% of savings were passed on to consumers.

President Joe Biden called on Congress to suspend the federal gas tax through the end of September “to give Americans a little extra breathing room” as they face soaring gas prices. If there is a gas tax "holiday," how much would U.S. drivers see in savings?

The federal gas tax is imposed on refiners such as Exxon Mobile and Chevron, which means any savings from a tax holiday would trickle down to consumers instead of going into effect directly at the pump. The tax is 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel.

States, Congress skeptical of Biden's gas tax holiday

Biden's proposal would eliminate a federal tax for 90-days.

It is unclear whether there is enough support in Congress to suspend the federal gas tax.

While some states praised Biden’s proposal, it's unclear how many states will suspend their gas tax.

WASHINGTON – President Joe Biden is facing an uphill battle to get Congress and some states on board to suspend federal and state gas taxes — a move aimed at offering relief to Americans as gas prices surpass $5 a gallon around the country.

Biden was met with skepticism Wednesday as he called on lawmakers on Capitol Hill and states to suspend the federal gas tax for the next three months. The move would pause a federal tax of 18.4 cents per gallon of gas and 24.4 cents for diesel.

President Biden calls for federal gas tax holiday to fight inflation

Happy Wednesday, OnPolitics readers!

Tuesday night's primaries proved to be a good night for women, such as D.C. Mayor Muriel Bowser, who was renominated for a third term.

Bowser claimed the primary victory despite the headwinds of increased crime in the nation’s capital and two Democratic challengers from the city council who unsuccessfully tried to unseat her.

Her win is another ding against progressives during the June primaries, which have further revealed the stark differences between progressives and moderates on addressing violence.

No more Mo: Business executive Katie Britt claimed the Republican nomination for a U.S. Senate seat in Alabama on Tuesday, easily winning a runoff over congressman Mo Brooks, who was a vocal advocate of Trump's protests over the 2020 election.

Many once favored Brooks for the GOP nomination because he had the endorsement of Trump. But the former president pulled his support from Brooks in March after the latter began saying it was time for Republican voters to move past all the 2020 election disputes.

It's Amy and Chelsey with today's top stories out of Washington.

President Biden calls on Congress to pass federal gas tax holiday

President Joe Biden on Wednesday called on Congress to suspend the federal gas tax for the next three months in one of his administration's most controversial efforts to give Americans immediate relief as gas prices soar above $5 a gallon in many states.

The proposal was met with widespread skepticism. House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and other top Democrats were noncommittal, signaling it could be doomed in Congress.

A three-month federal gas tax holiday would suspend a tax of 18.4 cents per gallon of gas and 24.4 cents for diesel that drivers pay when they fill their tanks. The White House billed the holiday as a way to provide some "breathing room" as it works to bring costs down over the long term. The pause, which Biden envisions lasting through September, would require congressional approval.

How much would consumers really save? While it might provide some short-term relief, the policy has plenty of critics. Many economists argue a pause in the federal gas tax could drive up inflation once the holiday ends, deplete transportation funds and only reduce a fraction of the overall historic spike in gas prices.

A study from the University of Pennsylvania in April estimated the price of gas would decrease by 14.72 cents a gallon if 80% of the benefit were passed along to consumers. A federal gas holiday from March to December would lower average per capita gasoline spending by $47.

Want this news roundup in your inbox every night? Sign up for the OnPolitics newsletter here.

Real quick: stories you'll want to read

Seven lawmakers, seven abortion stories

Ahead of a Supreme Court ruling that could change the landscape of abortion rights throughout the country, seven lawmakers shared their own abortion stories as the right to guaranteed access is under threat.

The representatives are all Democrats, parents and supporters of Roe v. Wade, the high court ruling protecting the constitutional right to an abortion.

"The (leaked draft) opinion (overturning Roe) is so misogynistic that I can't even begin to even put into words how vile I think the decision is," Rep. Jackie Speier, D-Calif., said of the leaked ruling in May. Speier was the first sitting member to share her story in 2011.

Reps. Cori Bush of Missouri, Pramila Jayapal of Washington and Barbara Lee of California opened up about their abortions last September at a House Oversight Committee hearing on abortion rights. Michigan Sen. Gary Peters was encouraged to come forward about his ex-wife's abortion after the death of Supreme Court Justice Ruth Bader Ginsburg in 2020. Ginsburg was an advocate of abortion rights.

Reps. Marie Newman of Illinois and Gwen Moore of Wisconsin went public with their stories after the draft ruling was leaked to the public.

Each lawmaker fought reservations to sharing their intimate experiences in light of what many fear is an anticipated reversal to abortion rights.

"I feel like it's important for people to know I'm there with them and I'm gonna do everything I can do to help them once they make their own personal decision," said Lee. "So as hard as it is for me still, I hope it's helping other people."

Abortion left up to the states: Women seeking an abortion will have to navigate a maze of individual state laws if Roe v. Wade is overturned. Within a year as many as 75,000 women won’t make it to a provider, according to one estimate.

Quick-thinking: A clever New York City woman was rescued from a hostage situation after including a message to call the police in her GrubHub order. --Amy and Chelsey

Biden will call for 3-month suspension of gas tax, though officials ...

U.S. President Joe Biden calls for a federal gas tax holiday as he speaks about gas prices during remarks in the Eisenhower Executive Office Building's South Court Auditorium at the White House in Washington, U.S., June 22, 2022.

Washington CNN —

President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes until the end of September, framing the move as necessary to provide relief to American consumers but itself not enough to resolve the problem of surging energy prices.

Biden’s decision to call for a federal gas tax holiday – a move once derided as a gimmick by Barack Obama and viewed skeptically by leading economists – almost certainly won’t make it through Congress, especially as it faces blowback from the President’s own allies on Capitol Hill. House Speaker Nancy Pelosi stopped short of endorsing the plan in a statement after Biden’s remarks.

But he cast the move as a way to give some relief to families as he tries to find solutions to one of his top political problems.

“By suspending the 18-cent gas tax, federal gas tax for the next 90 days, we can bring down the price of gas and give families just a little bit of relief,” Biden said in a speech from the White House.

“I fully understand that a gas tax holiday alone is not going to fix the problem,” he continued, “but it will provide families some immediate relief, just a little bit of breathing room as we continue working to bring down prices for the long haul.”

Biden also called on states to take steps removing their own taxes on gas and diesel. And he told oil refining companies to increase their capacity ahead of their planned meeting this week with administration officials.

Combined, Biden claimed, the wish list could reduce the price per gallon of gas by $1. Yet that figure relies on a number of steps entirely out of the President’s control – not least of which is convincing a skeptical Congress to approve his plan.

In her statement after Biden’s remarks, Pelosi did not commit to bringing a gas tax holiday up for a vote.

“We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate,” she wrote.

The steps amounted to Biden’s latest attempt to show he’s taking initiative in reducing fuel prices as Americans grow more frustrated by the financial burden. White House officials had been considering a gas tax holiday for months, but held off until now in part because of concerns at how it might be received in Congress.

Republicans widely oppose lifting the gax tax. Even some Democrats – including President Barack Obama on the campaign trail in 2008 – have cast a gas tax holiday as a “gimmick.”

Yet facing growing anger and the start of the summer driving season, Biden determined that even small steps bordering on symbolic are worth taking.

“In the conditions that we are in today, that’s not a gimmick, that’s a little bit of breathing room for the American people as we get into the summer driving season,” said Amos Hochstein, senior adviser for energy security at the State Department, in an interview on CNN’s “New Day” Wednesday morning.

The current federal tax on gas is about 18 cents per gallon, while the federal tax on diesel stands at 24 cents per gallon. Even if savings from lifting those taxes were passed directly to consumers – which isn’t guaranteed – the savings for one fill-up could only be a few dollars.

Even some Democrats have cast doubt previously on a gas tax holiday, noting that the tax provides an important source of funding for road construction. Officials said Biden would call for using other revenue sources to make up for the shortfall, and he worked to allay some of those concerns in his speech.

He also sought to use the occasion to explain his decisions that have contributed to higher gas prices. The President defended banning Russian energy imports to the US after Russian President Vladimir Putin invaded Ukraine – a move Biden acknowledged at the time would raise gas prices. Imports from Russia make up a small slice of the American energy portfolio, roughly 8% in 2021, of which only about 3% was crude oil.

“We could have turned a blind eye to Putin’s murderous ways, and the price of gas wouldn’t have spiked the way it has. I believe that would have been wrong,” Biden said. “I believed then and believe now that the free world had no choice.”

Economists skeptical

Some economists also say that the savings passed along to consumers could be minimal as retailers simply raise the base price of gas to make up the difference.

“Whatever you thought of the merits of a gas tax holiday in February, it is a worse idea now,” Jason Furman, a senior economic official in Obama’s administration, wrote on Twitter. “Refineries are even more constrained now so supply is nearly fully inelastic. Most of the 18.4 cent reduction would be pocketed by industry – with maybe a few cents passed on to consumers.”

Senior administration officials have acknowledged that criticism, but said Biden would pressure companies to pass along the savings.

“There’s no time now for profiteering,” Biden said, adding later that energy companies must increase refining capacity to produce more gas for American consumers and bring down prices.

“To the companies running gas stations and setting those prices at the pump – this is a time of war, global peril, Ukraine. These are not normal times,” he said. “Bring down the price you are charging at the pump to reflect the cost you are paying for the product.”

Yet even there, quick action seems difficult. Refining capacity that was cut during the Covid-19 pandemic would take months to get back online, and refineries now are running at nearly 90% of their capacity.

Biden looks for scapegoats

The President has turned up the heat on oil and gas companies in recent weeks as gas prices have shot up, with the national average climbing above $5 per gallon at one point last week.

Biden has made Russia’s war in Ukraine his top scapegoat for climbing gas prices but has also called out oil and gas companies, saying they aren’t doing enough to bring down costs and accusing them of profiting off the war. He repeated some of those arguments on Tuesday, saying the country needs “more refining capacity.”

“This idea that they don’t have oil to drill and to bring up is simply not true,” he said.

In response to the President’s criticisms, the oil industry has largely said that it is the Biden administration’s fault that prices are so high because of what they perceive as limits on domestic oil and gas production.

Chevron CEO Mike Worth said in a letter on Tuesday that Biden should stop criticizing the oil and gas industry and called for a “change in approach” from the White House.

“Your Administration has largely sought to criticize, and at times vilify, our industry,” Worth wrote in an open letter to Biden. “These actions are not beneficial to meeting the challenges we face and are not what the American people deserve.”

Biden responded later in the day: “He’s mildly sensitive,” adding: “I didn’t know they’d get their feelings hurt that quickly.”

Kevin Liptak Kate Sullivan
Kevin Liptak
Kate Sullivan

Drivers don't see full benefit from state gas tax holidays - CNNPolitics

But consumers don't receive the full benefit of gas tax holidays, according to a recent analysis by the nonpartisan Penn Wharton Budget Model, which looked at suspensions in three states through mid-May. Instead, they have to share the savings with gas suppliers, which capture part of the economic benefit if pump prices don't fall by the full amount of the suspended tax.

The report quantifies some of the criticism that economists and budget experts have voiced about gas tax holidays. In addition, they argue that temporarily eliminating the tax does not help curb inflation in the long run, since it spurs demand by lowering prices without enhancing supply. Plus, it reduces tax revenue and funding for transportation repairs and infrastructure.

So far, Connecticut, Florida, Georgia, Maryland and New York have temporarily suspended their gas taxes, while Illinois and Kentucky blocked scheduled gas tax rate hikes, according to the nonpartisan Tax Policy Center. Other states have expressed interest in gas tax holidays or other measures to help residents pay for fuel.

Congress is unlikely to act on Biden's call. Though past administrations have called for gas tax holidays, lawmakers have never approved such a measure.

State gas tax holidays

In Maryland, 72% of the tax savings was passed on to consumers, according to Penn Wharton, which used two separate methods to calculate the benefit in each state it examined.

The state suspended its gas tax of 36.1 cents per gallon from March 18 to April 16. Drivers saw a drop of about 12 cents the day after the holiday took effect, but the reduction grew to a little less than 30 cents for much of the period.

Georgia eliminated its 29.1 cents per gallon tax on gas from March 18 to May 31. Consumers there received between 58% and 65% of the savings, depending on which method Penn Wharton used.

Peach State drivers saw prices decline more gradually, starting with 7 cents soon after the holiday began to about 30 cents in mid-May.

Between 71% and 87% of the savings was passed on to consumers in Connecticut, Penn Wharton found. The state eliminated its gas tax of 25 cents per gallon from April 1 to June 30. Gas prices slid 11 cents the day after the holiday began. The decline grew to 23 cents on April 15 but then shrank slowly to about 14 cents in mid-May.

"Based on our study, we don't find the entire tax decrease was passed on to consumers," said Zheli He, a Penn Wharton economist who's a co-author of the report. "The rest of it was captured by distributors."

Federal gas tax holiday

On Wednesday, Biden pushed Congress to suspend the roughly 18-cent federal gas tax, saying it would "give families just a little bit of relief."

Experts have questioned how much gas tax holidays really help drivers.

Consumers would probably get only one-third of the benefit of a federal gas tax break, tweeted Jason Furman, an economics professor at Harvard University who was chair of the Council of Economic Advisers in the Obama administration.

"Whatever you thought of the merits of a gas tax holiday in February it is a worse idea now," Furman tweeted . "Refineries are even more constrained now so supply is nearly fully inelastic. Most of the 18.4 cent reduction would be pocketed by industry -- with maybe a few cents passed on to consumers."

Senior administration officials have acknowledged that criticism but said Biden would pressure companies to pass along the savings to drivers.

"The President is calling and demanding that the industry, the companies and the retailers, pass that on to the consumer at the pump," Amos Hochstein, senior adviser for energy security at the State Department, told CNN "New Day" co-anchor John Berman on Wednesday.

"We would scrutinize it and we would call on the industry to do exactly that, to pass it on," he said.

Biden could decide on federal gas tax holiday by end of this week

President Joe Biden said Monday that he hopes to make a decision about a gas tax holiday by the end of the week, as the administration looks for ways to ease record fuel prices in a midterm election year.

Biden said he is considering a pause on the federal gas tax, which some lawmakers in his party have pushed as a way to reduce prices at the pump for Americans.

"Well, I hope I have a decision based on the data I'm looking for ... by the end of the week," Biden said Monday on vacation in Rehoboth Beach, Delaware.

The gas tax adds 18.4 cents total per gallon of gasoline – 18.3 cents in excise tax plus 0.1 cent in a storage fee. For diesel, it is 24.3 cents plus the 0.1 cent fee. The national average price for a gallon was $4.981 on Monday, according to AAA.

Pause on tax? Biden officials say recession isn't 'inevitable,' gas tax holiday remains a possibility

Biden administration officials suggested Sunday that the administration could suspend the federal tax gas. Treasury Secretary Janet Yellen told ABC's "This Week" that it's "an idea that’s certainly worth considering," and Energy Secretary Jennifer Granholm said on CNN's "State of the Union" that the idea was under evaluation.

"Part of the challenge with the gas tax, of course, is that it funds the roads, and we just did a big infrastructure bill to help fund the roads," Granholm said.

"If we remove the gas tax, that takes away the funding that was just passed by Congress to be able to do that," she said.

Biden said he talked Monday morning with Larry Summers, Treasury secretary in the Clinton administration and economic adviser in the Obama administration, who has raised alarm about a potential recession as the Federal Reserve raises interest rates to tame inflation.

“There’s nothing inevitable about a recession,” Biden said.

Summers blamed spending from Biden’s $1.9 trillion American Rescue Plan, passed in 2021, for fueling inflation and blasted the idea of a gas tax holiday as “shortsighted, ineffective, goofy and gimmicky.”

Biden said members of his administration plan to sit down this week with CEOs of oil companies and seek “an explanation how they justify making $35 billion” during the first quarter of 2022.

The president expressed optimism that he will find support in Congress to lower health care costs, including capping the cost of insulin at $35 – one piece of his domestic agenda that stalled this year.

“I think we’re going to be able to get a change in Medicare and a reduction in the cost of insulin,” Biden said.

Biden said he wants to increase taxes on corporations to pay for the proposals, but his plan to overhaul the tax system has faced resistance in the evenly divided Senate.