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Biden Pushes Gasoline Tax Holiday

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US President Joe Biden will push lawmakers for a three-month break in the nationwide gasoline tax as the White House attempts to bring down politically sensitive prices at the pump for US consumers.

The announcement “will be focused on suspending the federal gas tax for three months,” a senior administration official said Wednesday. “It will also call on states to either suspend their gas taxes or provide the equivalent consumer relief in other ways.”

But tax relief will take an act of Congress — no small measure in a divided legislature where energy issues have been fraught.

The administration is already in the midst of a nearly 1 million barrel per day release of strategic stocks, and has authorized the sale of gasoline with a higher ethanol content in an effort to put downward pressure on retail prices.

Easing the federal tax — 18.4¢ per gallon for gasoline and 24.4¢/gallon for diesel — will create a gap in the Highway Trust Fund. Biden will propose that Congress use a fiscal surplus to cover the estimated $10 billion gap.

Adding Up Relief

The White House will also advocate states offer gas tax relief. Five states — Connecticut, Florida, Georgia, Maryland and New York — have already done so. The administration will also push for retailers to pass the entirety of gas tax relief onto consumers, and for oil companies to pass on the drop in crude prices.

Taken together, the administration official said consumers could see relief of about $1/gallon. The White House is also calculating that higher profit margins are adding about 66¢/gallon on the prices at the pump today — which officials are also advocating be deployed to increasing refining capacity.

“You could see relief of up to $1 or potentially more from everyone coming to the table to try to solve the acute problem.”

Biden has turned up the heat on the oil sector in recent weeks, saying Exxon Mobil made “more money than God” and sending a letter to seven refiners last week criticizing high profits and urging increased refining capacity.

Oil industry officials have consistently pointed the finger at the Biden administration and its focus on climate issues for high prices.

"Your administration has largely sought to criticize, and at times vilify, our industry," Chevron CEO Mike Wirth said Tuesday in a published letter addressed to President Joe Biden. "These actions are not beneficial to meeting the challenges we face."

“I didn’t know they’d get their feelings hurt that easily,” Biden retorted in front of reporters Tuesday.

Energy Secretary Jennifer Granholm is slated to meet with executives from seven refiners on Thursday for discussions focused on adding more products supply, although doing so in a meaningful way could be difficult.

A second administration official said the focus of the meeting will be on seeing “if there are some concrete near-term solutions and ways the federal government can be helpful to bring that additional capacity on line as quickly as possible.” US refining capacity is currently running at 94%, according to the most recent government data.

Topic:
Policy and Regulation
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