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President Biden has asked for a three-month suspension of the nation’s national gasoline tax in reaction to the nation’s skyrocketing oil prices, as well as cushion the effect of the continuous price hike and economic situation for Americans
A gallon of gasoline now costs about $5 (£4) on average, up from about $3 a year ago. President Biden is under pressure to answer since there will be national elections for Congress in November. But, according to analysts, eliminating the fee would only have a minor effect on household fuel and diesel expenditures.
With members of President Biden’s party worried that the move would primarily benefit oil and gas businesses, political support for the gas tax holiday, which would require a congressional act, is also in question. The White House accepted the criticism but insisted that politicians should endeavor to lessen the burden on families by doing everything within their ability.
A member of the President Biden administration said, “A gas tax holiday alone will not, on its own, reduce the run-up in expenses that we’ve experienced.”
Congress should take whatever action it can to give working families breathing room at this particular time when the war in Ukraine costs American households.
What is the gas tax in the US?
To help pay for roadway infrastructure, the US currently levies a tax on gasoline and diesel that amounts to around 18 cents per gallon and 24 cents, respectively—according to President Biden, ending the fee until September would cost the government $10 billion. The action represents the most recent attempt by nations to address the skyrocketing energy prices.
Since last year, oil prices have increased as demand has outpaced supply, hampered by cuts many businesses made after the pandemic struck in 2020 and caused demand to collapse. In addition, the conflict in Ukraine has forced Western nations to avoid Russian oil, a key energy producer, which has added to the shortage.
The imbalance in supply and demand for petroleum products is the root of the problem, according to a representative of the industry association American Fuel and Petrochemical Manufacturers. “Pausing the federal gas tax will undoubtedly provide near-term relief for US drivers, but it won’t solve the root of the issue,” the representative said.
Longer-term strategies are reportedly required to increase US energy production. President Biden has already taken action, such as releasing previously unheard-of quantities of oil from national reserves and removing import levies on solar panels. In addition, President Biden is pushing state governments, which generally levy their taxes, often more significant than the federal government’s, to take similar actions in addition to suspending the federal gasoline tax. These charges have already been dropped in certain states, including New York.
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As his criticism of the industry has grown recently, president Biden has also urged oil and gas companies to increase their output. Although the UK has proposed a windfall tax on energy company profits, the US has no political impetus to fund relief for people through a similar measure.
