Biden will also call on states to take action to remove their own gasoline and diesel taxes. And he will tell oil refining companies to increase capacity ahead of their scheduled meeting this week with administration officials.
Combined, according to senior administration officials, the measures Biden will seek could lower the price of a gallon of gasoline by $1. Yet that figure rests on a number of steps entirely beyond the president’s control. – not the least of which is to convince a skeptical Congress to approve his plan.
The moves are Biden’s latest attempt to show he is taking the initiative to cut fuel prices as Americans grow increasingly frustrated with the financial burden. White House officials have been considering a gasoline tax exemption for months, but have so far delayed in part because of concerns about how it might be received in Congress.
Republicans largely oppose lifting the gas tax. Even some Democrats, including House Speaker Nancy Pelosi, have been cool about the idea. And in the past, top Democratic officials — including President Barack Obama during the 2008 election campaign — have touted a gas tax exemption as a “trick.”
Yet, in the face of growing anger and the start of the summer driving season, Biden has determined that even small steps bordering on tokenism are worth taking.
“In the conditions we find ourselves in today, this is not a gimmick, this is a bit of respite for the American people as we enter the summer driving season,” said Amos Hochstein, adviser principal for energy security at the State Department, in an interview on CNN’s “New Day” program Wednesday morning.
The current federal gasoline tax is approximately 18 cents per gallon, while the federal diesel tax is 24 cents per gallon. Even if the savings from waiving these taxes were passed directly to consumers – which is not guaranteed – the savings from a fill-up could only be a few dollars.
“Look, it will have an impact, but it won’t have an impact on major road construction and major repairs,” he told reporters.
Some economists also say the savings passed on to consumers could be minimal, as retailers simply raise the base price of gasoline to make up the difference.
“Whatever you think of the merits of a gas tax exemption in February, it’s a worse idea now,” Jason Furman, the Obama administration’s top economics official, wrote on Twitter. “Refineries are even more constrained now, so supply is almost completely inelastic. Most of the 18.4 cent reduction would be pocketed by industry – with perhaps a few cents passed on to consumers.”
Senior administration officials acknowledged those criticisms, but said Biden would pressure companies to pass on the savings.
“The president is calling and demanding that industry, businesses and retailers get this to the consumer at the pump,” Hochstein said, without detailing anything specific the president might do to ensure consumers see all of the savings.
“We would look at it and ask the industry to do just that, pass it on,” he said.
Another official, speaking ahead of the announcement, acknowledged that simply suspending the tax “will not solve the whole problem”.
“It’s something that can be done to take real action to relieve some of that pain at the pump, and we see it as part of a suite of policies designed to provide that relief, including policies focused on the offer,” the official said.
“We’re certainly approaching it in a constructive, concrete, and pragmatic way. Again, I think the American people would want their leaders to do that,” a second senior administration official said, noting Thursday’s meeting with seven senior leaders and Energy Secretary Jennifer Granholm.
Biden is looking for scapegoats
The president has been upping the ante on oil and gas companies in recent weeks as gas prices have soared, with the national average topping $5 a gallon at one point last week.
Biden made Russia’s war in Ukraine his main scapegoat for rising gas prices, but also called out oil and gas companies, saying they weren’t doing enough to cut costs and accusing them of profiteering of the war. He repeated some of those arguments on Tuesday, saying the country needed “more refining capacity.”
“This idea that they don’t have oil to drill and extract is just not true,” he said.
In response to the president’s criticism, the oil industry has widely said it’s the Biden administration’s fault that prices are so high due to what they perceive as limits on domestic oil and gas production. gas.
Chevron CEO Mike Worth said in a letter 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 widely sought to criticize, and at times vilify, our industry,” Worth wrote in an open letter to Biden. “These actions are not beneficial to addressing the challenges we face and are not what the American people deserve.”
Biden responded later that day, “He’s slightly sensitive,” adding, “I didn’t know they would get hurt so quickly.”