The White House has, twice, tapped the Strategic Petroleum Reserve. They have urged domestic producers to up production and the president is scheduled to visit Saudi Arabia next month to ask OPEC nations to up oil production. The White House even considered distributing gas cards to Americans before ultimately dismissing the idea as unworkable.
Now, as gas prices have crossed the $5 a gallon mark, the president is considering something else: A temporary federal gas tax holiday.
According to CNN, Biden has said that he is mulling over such a proposal. The federal gas tax is 18.3 cents per gallon. Pausing the gas tax would require an act of Congress.
“I hope to have a decision based on the data I’m looking for by the end of the week,” the president told reporters. Biden also indicated that the gas card idea isn’t completely dead.
“That’s part of what we’re considering, that’s part of the whole operation.”
The Secretary of Energy, Jennifer Granholm, said on CNN this week that Biden is looking at the proposal.
“It’s certainly one of the things the President is evaluating,” Granholm said, while not explicitly endorsing the idea. “I know this is what’s been happening in many states as well. Honestly, the whole array of tools are still being pressed. He’s used the biggest tool that he has, but he’s obviously very concerned about this continued upward pressure on prices.”
Federal gas tax holidays have been proposed before during periods of high gas prices, however, many economists are skeptical of the idea.
“I’m no fan of the gas tax holiday. I think that`s kind of a gimmick, and eventually, you have to reverse it,” Larry Summers, the former Treasury secretary, said on television this week, per CNN.
A recently published Wharton study looked at the effects of gas tax holidays at the state level. The study concluded that some of the tax suspensions reached the consumers, but the reductions were not sustained for the whole holiday.
“We find that the suspension of the state gasoline tax in Maryland reduced prices faced by consumers by 26 cents on average over the course of the gasoline tax holiday, which implies that 72 percent of the tax decrease passed on to consumers in the form of lower prices. This result is robust to both DID and synthetic control methods,” the Wharton study said.
“We can estimate the full effects of the gasoline tax holidays in Georgia and Connecticut once more data on gasoline prices in these states over time become available.”
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.