Biden Asks Congress To Pause Gas Tax To Help Lower Record Pump Prices

U.S. President Joe Biden on Wednesday called on Congress to pass a three-month suspension of the federal gasoline tax to help combat record pump prices, but opposition from lawmakers within his own party suggests the request is unlikely to be met.

In announcing his support for the suspension, Biden also echoed some of the concerns about its effectiveness, but said American families paying much more for gasoline, caused in part by Russia's invasion of Ukraine, deserve some financial relief.

"I fully understand that a gas tax holiday alone is not going to fix the problem but it will provide families some immediate relief, just a little bit of breathing room, as we continue working on bringing down prices for the long haul," Biden said.

The president also urged states to temporarily suspend state fuel taxes, which are often higher than federal rates. He is asking major oil companies to suggest ideas on how to bring back idled refining capacity when they meet with Energy Secretary Jennifer Granholm on Thursday.

Biden and his advisers have been discussing the issue for months amid increasing pressure to act as record-high gas prices weigh down the president's opinion poll ratings and cast doubt on Democrats' chances of retaining congressional power in November's elections.

A suspension of the 18.4 cents per gallon federal gasoline tax and 24.4 cent diesel tax would require congressional approval, likely making Biden's pitch largely symbolic.

LAWMAKERS OPPOSED

Lawmakers in both parties have expressed resistance to suspending the tax, with some Democrats, including House of Representatives Speaker Nancy Pelosi, worried the move could have limited effect on prices if oil companies and retailers pocket much of the savings.

Peter DeFazio, a Democrat and the chair of the House Committee on Transportation and Infrastructure, said on Wednesday a federal gas tax holiday would provide "miniscule relief" while blowing a budget hole in a Highway Trust Fund needed to fix crumbling bridges and build a modern infrastructure system."

Biden asked Congress to suspend the fuel tax through September, a move that will cost the Highway Trust Fund roughly $10 billion in forgone revenue but could be made up from other areas of a budget that is seeing revenue grow and deficits shrink as the United States emerges from the COVID-19 pandemic.

Some states, such as New York and Connecticut, have already paused state fuel taxes, while others have floated ideas such as consumer rebates and direct relief.

Refiners are struggling to meet global demand for diesel and gasoline, exacerbating high prices and aggravating shortages.

"Pausing the federal gas tax will certainly provide near-term relief for U.S. drivers, but it won't solve the root of the issue - the imbalance in supply and demand for petroleum products," a spokesperson for the American Fuel and Petrochemical Manufacturers industry group said.

Longer-term policies are still needed to boost U.S. energy production, it said.

U.S. pump prices are averaging near $5 a gallon as soaring demand for motor fuels coincides with the loss of about 1 million barrels per day of processing capacity. In the last three years many plants were closed when fuel demand cratered at the height of the pandemic.

Biden said he understands the politics around Republicans seizing on high gas prices ahead of the elections, but he asked his rivals whether they instead would've chosen not to support Ukraine.

"So for all those Republicans in Congress criticizing me today for high gas prices in America: Are you now saying we were wrong to support Ukraine? Are you saying we were wrong to stand up to Putin? Are you saying that we would rather have lower gas prices in America and Putin's iron fist in Europe? I don't believe that," Biden said.