Biden Backs Gas Tax Holiday, But How Much Relief Is Unlikely

Getty Images’ Justin Sullivan In an effort to lower gas prices, the announcement is anticipated this week, although there is a lot of criticism.

President Biden might enact a gas tax holiday, which would drop the cost at the pump by around 18 cents per gallon. However, there isn’t much a president can do to swiftly lower the price of petrol.

The average driver would probably save a staggering $90, or around 18 extra gallons of gas over the year, if the gas tax were suspended for the whole calendar year.

Next month, Biden will travel to Saudi Arabia, where the topic of the world’s oil supplies will undoubtedly come up.

Due to a 41 percent increase since Russia invaded Ukraine almost four months ago, the national average price for a gallon of gas has risen to $4.97. The federal gas tax, which is now set at 18.4 cents a gallon, accounts for only a small portion of that total—roughly 3.7 percent. President Biden stated that he is thinking about stopping the collecting of that tax and may make an announcement soon.

Biden told a gathering of reporters on Monday, “Yes, I’m thinking about it. “I intend to make a choice based on the information. By the end of the week is what I’m after.”

A president can’t do much to quickly lower gas costs. Later this week, administration members will meet with the CEOs of the biggest oil corporations to discuss the increase in gas prices. Biden has already released some of the strategic petroleum supply to the market. Biden has announced plans to travel to Saudi Arabia next month, and the global energy supply will certainly be a topic of conversation. However, Biden is powerless to compel Saudi Arabia to increase oil production, and a gas tax holiday would at least demonstrate action given that sanctions for the invasion have cut off access to Russian supplies. Of course, such a move would require Congressional approval, putting another potential wrench in the situation.

A Pause in Gas Taxes—Would It Really Help?

But what would it mean for regular drivers if the federal gas tax were eliminated? (State gas taxes differ greatly and are a completely different topic.) Depending on how much gas you use, abolishing the gas tax would probably result in a yearly savings of less than $100. The average American car gets 27.35 miles per gallon on the highway, and because most people drive 13,500 miles annually, that works out to 494 gallons of fuel burned annually. The annual savings from paying 18.4 cents less per gallon would be around $91 (drumroll please). And that’s only true if consumers receive the full benefit of the reduction from oil producers and petrol stations.

Biden should be aware that lowering the gas tax will only slightly assist motorists. In reality, President Obama spoke out against raising the gas tax before Biden was appointed vice president. Obama claimed that cutting the tax is the simple solution during his presidential campaign, even though both Hillary Clinton and John McCain supported the idea. Obama remarked at the time, “We’re fighting over a gimmick that would save you half a tank of gas over the course of the summer so that everyone in Washington can pat themselves on the back and claim they did something. Senator Mitch McConnell echoed Obama’s remarks and referred to the concept of a gas tax holiday earlier this year when it was being considered in Congress.

The federal gas tax was last increased in 1993, and we have long maintained that the existing 18-cent levy is insufficient to pay for well maintained roads and bridges (the federal tax on diesel fuel is 24.4 cents). Early in Biden’s presidency, there was a brief discussion of increasing the federal gas tax, but that discussion has long since passed.