Biden weighs offering gas tax holiday

view original post

REHOBOTH BEACH, Del. — President Joe Biden said Monday that he’s considering a proposal to temporarily suspend the collection of the federal gasoline tax, possibly saving U.S. motorists as much as 18.4 cents a gallon.

The move likely would require congressional sign-off and could not be taken via executive action. A suspension of the tax would likely face an uphill climb for approval. House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Mitch McConnell, R-Ky., have expressed skepticism in the past about such a move.

“Yes, I’m considering it,” Biden told reporters after taking a walk along the beach near his vacation home in Delaware. “I hope to have a decision based on the data — I’m looking for it by the end of the week.”

A White House official said conversations are ongoing and that the president has made clear he is willing to explore all options and hear all ideas that would help lower gasoline prices.

The administration has few options to lower prices at the pump, which began to climb last year and surged after Russia invaded Ukraine in February. The nation’s average gas price was just under $5 a gallon Monday, according to AAA. In Arkansas, the average price Monday was $4.52 and has held steady for about a week now.

Biden said members of his team were to meet this week with chief executive officers of the major oil companies to discuss gas prices. Biden has been critical of oil companies, saying they are making excessive profits when people are feeling the crunch of skyrocketing costs at the pump and inflation. Biden said he would not be meeting the oil executives himself.

“I want an explanation for why they aren’t refining more oil,” Biden said.

[embedded content]

The Biden administration has already released oil from the U.S. strategic reserve and increased ethanol blending for the summer, in addition to sending a letter last week to oil refiners urging them to increase their refining capacity. Yet those efforts have yet to reduce price pressures meaningfully.

Some lawmakers have advanced plans to suspend the federal gasoline tax — but that would risk siphoning money from the Federal Highway Trust Fund that pays for road and transit systems. Administration officials and top congressional Democrats caution that there’s no guarantee the savings would be passed on to consumers.

Biden demurred on whether the administration was also considering issuing gas cards. Officials have acknowledged that was under consideration but signaled it’s now unlikely, citing a range of issues.

The Penn Wharton Budget Model released estimates Wednesday showing that consumers saved at the pump because of gas tax holidays in Connecticut, Georgia and Maryland. The majority of the savings went to consumers, instead of service stations and others in the energy sector.

In an interview Sunday on ABC’s “This Week,” Treasury Secretary Janet Yellen expressed an openness to a federal gas tax holiday to give motorists some relief. “President Biden wants to do anything he possibly can to help consumers,” she said. “Gas prices have risen a great deal, and it’s clearly burdening households. So he stands ready to work with Congress, and that’s an idea that’s certainly worth considering.”

High gasoline prices have “been a substantial burden on American households and I think, while not perfect, [suspending the gas tax] is something that should be under some consideration as a policy to address it,” Yellen said in Toronto at a joint press conference Monday with Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland.

Oil refiners say their ability to produce additional gas and diesel fuel is limited, meaning prices could remain high unless demand starts to wane.

The American Petroleum Institute and American Fuel & Petrochemical Manufacturers sent a joint letter to Biden on Wednesday that said refineries are operating near capacity and nearly half of the capacity taken offline was because the facilities are converting to renewable fuel production.

“Today’s situation did not materialize overnight and will not be quickly solved,” the letter said. “To protect and foster U.S. energy security and refining capacity, we urge you to take steps to encourage more domestic energy production,” including new infrastructure and reducing regulatory burdens.

Oil refineries across the country are being retired and converted to other uses as owners balk at making costly upgrades and America’s pivot away from fossil fuels leaves their future uncertain. The downsizing comes as global demand ramps up amid sanctions on gasoline and diesel produced in Russia, the third-largest petroleum refiner in the world behind the United States and China.

Five refineries have shut down in the United States in the past two years, reducing the nation’s refining capacity by about 5% and eliminating more than 1 million barrels of fuel per day from the market, leaving the remaining facilities straining to meet demand. Yet even at this lucrative moment for what’s left of the refining industry, a White House desperate to bring down gas prices is having little success persuading owners to expand operations, and more closures are imminent.

GLOBAL PRICE SPIKE

The gasoline price spike has been a global burden on motorists.

At a gas station near the Cologne, Germany, airport, Bernd Mueller watches the digits quickly climb on the pump. The numbers showing how much gasoline he’s getting rise, too. But much more slowly. Painfully slowly.

“I’m getting rid of my car this October, November,” said Mueller, 80. “I’m retired, and then there’s gas and all that. At some point, you’ve got to scale back.”

Across the globe, drivers like Mueller are rethinking their habits and personal finances amid rising prices for gasoline and diesel, fueled by Russia’s war in Ukraine and the global rebound from the covid-19 pandemic. Energy prices are a key driver of inflation that is rising worldwide and making the cost of living more expensive.

In Manila, Ronald Sibeyee used to burn $16.83 worth of diesel a day to run his taxi. Now it’s as much as $41.40.

“That should have been our income already. Now there’s nothing, or whatever is left,” he said. His income has fallen about 40% because of higher fuel prices.

Gasoline and diesel prices are a complex equation of the cost of crude oil, taxes, the purchasing power and wealth of individual countries, government subsidies where they exist and the cut taken by middlemen such as refineries. Oil is priced in dollars, so if a country is an energy importer, the exchange rate plays a role — the recently weaker euro has helped push up gasoline prices in Europe.

And there are often geopolitical factors, such as the war in Ukraine. Buyers shunning Russian barrels and Western plans to ban the country’s oil have jolted energy markets already facing tight supplies from the rapid pandemic rebound.

There’s a global oil price — around $110 a barrel — but no global pump price because of taxes and other factors. In Hong Kong and Norway, motorists can pay more than $10 per gallon. In Germany, it can be around $7.50 per gallon, and in France, about $8. While lower fuel taxes mean the U.S. average for a gallon of gas is somewhat cheaper at $5, it’s still the first time the price has been that high.

RECESSION CONCERNS

Strolling on the sand Monday with his daughter Ashley, granddaughter Naomi, and his granddaughter’s fiance, Biden stopped frequently to chat with beachgoers who were spending the Juneteenth federal holiday at the beach.

He took a moment to offer assurances about inflation — the consumer-price index increased to a nearly 40-year high of 8.6% in May from the same month a year ago — and growing warnings from economists that a recession may be around the corner.

“We’re going to get though this, guys,” Biden told one group of beachgoers.

Last week, the Federal Reserve stepped up its drive to tame inflation by raising its key interest rate by three-quarters of a point — its largest increase in nearly three decades — and signaled more large rate increases to come.

Former Treasury Secretary Larry Summers told NBC’s “Meet the Press” on Sunday that in his estimation, “the dominant probability would be that by the end of next year we would be seeing a recession in the American economy.”

Biden said he spoke with Summers, who served as Treasury secretary in the Clinton administration, Monday morning.

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

Yellen said she expects the U.S. economy to slow in the months ahead, but that a recession is not a foregone conclusion.

“I expect the economy to slow,” Yellen said. “It’s been growing at a very rapid rate and the economy has recovered and we have achieved full employment. We expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”

Information for this article was contributed by Aamer Madhani, Josh Boak, Daniel Niemann, Paola Corona, Jade Le Deley and Hau Dinh of The Associated Press; by Josh Wingrove and Jenny Leonard of Bloomberg News (TNS); and by Evan Halper of The Washington Post.

    President Joe Biden talks to people as he walks on the beach with his granddaughter Natalie Biden and his daughter Ashley Biden, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    President Joe Biden talks to the media after walking on the beach with his granddaughter Natalie Biden, left, and his daughter Ashley Biden, right, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    President Joe Biden talks to the media after walking on the beach with his granddaughter Natalie Biden, left, and his daughter Ashley Biden, right, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    President Joe Biden walks on the beach with his granddaughter Natalie Biden, left, and his daughter Ashley Biden, right, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    President Joe Biden talks to people after walking on the beach with his granddaughter Natalie Biden and his daughter Ashley Biden, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    President Joe Biden walks on the beach with his granddaughter Natalie Biden, left, and his daughter Ashley Biden, right, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    Gas prices at the pump at the Casey’s gas station on eighth avenue in Cedar Rapids, Iowa on Friday, June 17, 2022. (Nick Rohlman/The Gazette via AP)
 
 
    President Joe Biden talks to the media after walking on the beach with his granddaughter Natalie Biden, left, and his daughter Ashley Biden, right, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)
 
 
    President Joe Biden walks on the beach with his granddaughter Natalie Biden, left, and his daughter Ashley Biden, right, Monday, June 20, 2022 at Rehoboth Beach, Del. (AP Photo/Manuel Balce Ceneta)