Fuel prices at the Chevron gas station in San Francisco June 9, 2022
Bloomberg | Bloomberg | Getty Images
For months, drivers in the United States have been confronted with eye-catching prices when filling their gas tanks.
Now President Joe Biden is weighing in on a new remedy – a federal gas tax.
One gallon of gas now costs an average of $ 4.97, according to AAA. This is a slight improvement over earlier this month, when the national average crossed the $ 5 threshold for the first time. But prices are up from $ 4.59 a month ago and $ 3.07 a year ago.
However, in some states – such as Washington, Oregon and Nevada – average gas prices are more than $ 5.50 per gallon. In California, the average is currently $ 6.38 per gallon.
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The federal gas tax is 18.4 cents a gallon, while the states separately impose their own taxes.
In February, Democrats Maggie Hassan of New Hampshire and Mark Kelly of Arizona proposed a bill that would suspend the federal gas tax by the end of the year.
The idea has attracted new attention from the Biden administration, with Treasury Secretary Janet Yellen calling it “an idea certainly worth considering” in a Sunday interview with ABC News this week.
Asked about Yellen’s comments, Biden said Monday he was considering it.
Gas tax savings for consumers would be minimal
The idea of temporarily abolishing the federal gas tax has drawn some criticism.
A report from Penn Wharton’s budget model at the University of Pennsylvania, published in March, found that the savings from such an interruption are unlikely to be significant for consumers.
The savings could only be about $ 50 if implemented in March by the end of the year, Kent Smuters, a professor at Wharton School at the University of Pennsylvania, told CNBC at the time.
In addition, federal tax revenues will be reduced by about $ 20 billion if a gas tax holiday is introduced by the end of this year, according to a March report.
Gas taxes fund very important road safety programs.
Andrew Gross
AAA speaker
The problem is that most of the savings from these changes – whether at the federal or state level – will not be passed on to consumers, Smuters said.
It could also mean less money for the highway trust fund, which finances roads and bridges, as well as other transport costs. The Senate bill proposes replacing tax revenues, which usually go to the highway trust fund, with transfers from the general fund.
Federal taxes make up a small portion of what consumers spend on gas, according to AAA spokesman Andrew Gross.
The price of oil is the biggest determinant of the price of gas, about 56%, he said. The rest includes about 14% for refining, 15% for distribution and marketing and the remaining 15% for federal and state taxes.
The AAA opposed the proposed federal legislation along with other organizations, including the American Road and Transportation Civil Service Association and the American Society of Civil Engineers.
“Gas taxes fund very important road safety programs,” Gross said. “And it’s not that our road safety needs will take a break either.
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