Will a Gas Tax Holiday or Suspension Lower Gas Prices Near You?
Even though prices have dropped from the all-time highs we saw a few months ago, we're all still feeling a lot of pain at the pump as summer comes to an end. The average price for a gallon of regular unleaded gas in the U.S. is below $4 per gallon ($3.81 per gallon on September 2), but that's still about 60¢ per gallon higher than the price at this time last year. And prices are much higher in some parts of the country (still averaging over $5 per gallon in California). Plus, gas prices are expected to stay high for at least a while longer. President Biden has been looking for ways to bring prices down – but the options are limited. He's tried encouraging greater oil production, tapping the nation's Strategic Petroleum Reserve, and allowing more ethanol in gasoline will lower prices some…but what about a gas tax holiday?
Over the summer, President Biden called for a three-month federal fuel tax holiday. Temporarily suspending the 18.4¢ per gallon federal gasoline tax (24.4¢ per gallon for diesel) is a popular idea, according to a Politico-Morning Consult poll from June. It would certainly put a dent in higher gas prices, even though it wouldn't wipe out the entire price increase we've experienced this year. However, the problem for Biden is that he'll have to get Congress to approve a suspension of the federal gas tax, and the votes just aren't there so far.
President Biden also urged states to suspend their gas tax or provide other forms of gas tax relief. State gas tax holidays could actually help reduce gas prices more than a federal holiday than the federal tax in all but one state (Alaska). A few states have already suspended their gas tax temporarily or delayed gas tax increases, and a number of governors and state lawmakers in other states around the country are publicly supporting their own fuel tax holidays (see details below). So, even though gas prices have come down a bit, don't be too surprised if a few more states jump on the bandwagon and enact some form of gas tax relief.
