President Joe Biden will call on Congress in a speech Wednesday to suspend federal gasoline and diesel taxes until the end of September, senior administration officials said, framing the move as necessary to provide relief to American consumers but itself not enough to resolve the problem of surging energy prices.
Biden will also call on states to take steps removing their own taxes on gas and diesel. And he’ll tell oil refining companies to increase their capacity ahead of their planned meeting this week with administration officials.
Combined, the senior administration officials claimed, the steps Biden will call for 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, and officials said Biden would not “speak to it as a precise figure” but rather use it as an example of what his proposals might achieve.
“A federal gas tax suspension alone won’t fix the problem we face, but it will provide families a little breathing room as we continue working to bring down prices for the long haul,” one senior administration official told reporters.
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.
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.
The senior administration official acknowledged that criticism and said Biden “is absolutely calling on companies to make sure that those savings are passed through to consumers.”
But the official acknowledged that simply suspending the tax “isn’t going to solve the whole problem.”
“It is something that can be done to take a real step to relieve some of that pain at the pump, and we see it as part of a suite of policies that are designed to provide that relief, including policies that focus on the supply side,” the official said.
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.
“We’re certainly approaching it in constructive, actionable, pragmatic ways. I again think the American people would want their leaders to do so,” a second senior administration official said, noting Thursday’s meeting with seven top executives and Energy Secretary Jennifer Granholm.