Biden calls for gas tax holiday, but it’s not a ‘total game changer’ and could even cause ‘unintended effect’
President Biden on Wednesday called on Congress to suspend the 18-cent federal gas tax for the summer amid record-high prices at the pump, but industry analysts say the move would save drivers only a few dollars and could spark an “unintended effect.”
With average gas prices hovering around $5 a gallon, Biden is pushing Congress to approve a three-month gas tax holiday through September. Also on Wednesday, the president called on states to suspend their own gas taxes or help consumers in other ways.
Gas prices have surged since the start of Russia’s invasion of Ukraine, hitting record highs last week. The average for regular in Massachusetts spiked up to $5.04 on June 12 before falling back below $5 a gallon this week.
“The price of gas is up by almost $2 a gallon since Putin accelerated his military build-up, and those high prices pose a challenge for working families,” Biden tweeted on Wednesday.
“Today, I’m calling on Congress to suspend the federal gas tax for three months to provide Americans some much-needed relief,” he added.
While other states, like Connecticut and New York, have suspended their gas taxes, Democrats in the Massachusetts State House have continued to reject Republican proposals for a gas tax holiday.
In addition to Biden calling on states to suspend their gas taxes or provide equivalent relief, he’s also urging oil companies to increase output and the industry to pass along the decrease in oil prices. Taken together, these actions could drop prices at the pump up to $1 a gallon, according to the White House.
But only suspending the 18-cent federal gas tax would save the average driver about $3 for a full fill up.
“It would not be a total game changer,” said Mark Schieldrop of AAA Northeast.
Over the last few weeks, Schieldrop has been emphasizing that lower gas demand is the factor that will cause prices to drop.
“If this pushes demand up, then there could be an unintended effect of prices rallying a bit and then the savings are wiped out,” he said.
“Maybe demand won’t go up that much just from 18 cents per gallon in savings, but we really don’t know,” Schieldrop added. “It would be an interesting scenario to see if 18 cents is really a difference maker for consumers at the gas pump.”
Demand for gas has declined in the last week, perhaps in response to record-breaking high gas prices, and that has helped push down prices at the pump, according to AAA.
The average price for regular in the Bay State on Wednesday was $4.98 a gallon, down from $4.99 on Tuesday. Prices are down 6 cents over the past week.
“It’s nice to see the pennies trickling away little by little,” Schieldrop said. “We’re definitely heading in the right direction, and the average should continue to fall.
“We have a ways to go, we’re not out of the woods quite yet, but it’s a better scenario than a week ago,” he added.
While the average is below $5 a gallon across the state, Suffolk County’s average is at $5.15 and Middlesex County’s average is $5.03. The average price on Nantucket is $6.12, and on Martha’s Vineyard gas is $6.04.
The best gas bargain in the Bay State right now is Hampden County, where gas has fallen to $4.88.
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