Politics

Biden’s gasoline plan calls on everyone outside of the White House to do their part

President Biden on Wednesday announced his plan to reduce sky-high gasoline prices that relied on just about everybody — state governments, Congress, oil companies — besides the White House to do something about it, but just about everybody involved panned the “call to action.”

Mr. Biden called for Congress to pass a three-month suspension of the 18.4-cent-per-gallon federal tax on gasoline and the 24-cent-per-gallon federal tax on diesel.

He urged states to pause their gas taxes, many of which are higher than the federal rate. The president also asked the oil industry to lower its profits while increasing supply and refining capacity.

“I’m doing my part,” Mr. Biden said. “I want the Congress, states and the industry to do their part as well.”

The White House said the actions, taken together, could reduce fuel prices by up to $1 per gallon.

The proposal met swift blowback from members of the president’s party. Democratic leaders in Congress revolted against his call to suspend the gas tax.

“I’m going to look at it — certainly — sympathetically, in the sense that the president is trying to do what I think is a good objective,” said House Majority Leader Steny H. Hoyer, Maryland Democrat. “What I’m not sure of is, in fact, that will have the intended effect … and whether it will save consumers money.”

Rep. Peter DeFazio, Oregon Democrat and chairman of the Transportation and Infrastructure Committee, said it was a “well-intentioned but ill-conceived policy.”

“I’m going to be working against it,” he said. “I do not support suspending the gas taxes. You know what happens in this town? You suspend the tax, it’s gone forever. Because then what? This ends in September, [then Republicans say,] ‘Democrats are raising your taxes!’”

House Speaker Nancy Pelosi, California Democrat, previously characterized a gas tax holiday as a public relations stunt.

On Wednesday, she said she will “see where the consensus lies on a path forward for the president’s proposal in the House and the Senate.”

The Democrats’ pushback against the leader of their party was striking. The price of gasoline is a top concern of voters in a tough midterm election year for Democrats.

Mr. Biden’s scramble for a solution to Americans’ pocketbook problems and the willingness of his Capitol Hill allies to reject his efforts underscored congressional Democrats’ mounting frustration with the White House.

The states, including Democratic-led states, are not likely to heed Mr. Biden’s call, either.

Although many states have considered it, just four — Maryland, Georgia, Connecticut and New York — have implemented a gas tax holiday. Florida approved a one-month suspension of its gas tax starting in October.

Tax analysts said Mr. Biden has little choice but to rely on Congress to pause the federal gas tax. Executive action won’t work, they said.

“It’s a classic power of the purse situation,” said Alex Muresianu, an analyst at the Tax Foundation, an independent think tank in Washington. “It’s something that should fall under the purview of Congress.”

Even if Mr. Biden could waive the tax unilaterally, it’s not a good move, according to critics. They say it would be a drop in the bucket when the national average price of gas is just shy of $5 per gallon.

The average American uses about 47 gallons of gasoline per month, according to the Federal Highway Administration. At $5 per gallon, the average American would save about $8.64 per month from a federal gas tax holiday.

“I fully understand that a gas tax holiday alone is not going to fix the problem,” Mr. Biden said. “But it will provide families some immediate relief, just a little bit of breathing room, as we continue working to bring down prices for the long haul.”

Opponents are skeptical that gas stations would pass the marginal savings down to consumers. They also worry that it would siphon billions of dollars from the Highway Trust Fund, which relies on the gas tax to pay for road projects.

“It’s a huge gimmick that’s not going to help very much in the near term, and it’s going to make things worse over the medium term,” said Marc Goldwein, the senior policy director for the Committee for a Responsible Federal Budget.

Economists say rising gas prices are primarily the result of high demand and low supply. 

“If prices are going up, subsidizing demand doesn’t make a whole lot of sense. That would make the problems worse,” Mr. Muresianu said.

The Biden plan does call for some supply-side solutions.

“I know my Republican friends claim we’re not producing enough oil and I’m limiting oil production,” Mr. Biden said. “Quite frankly, that’s nonsense.”

He touted his move to release 1 million barrels of oil per day from the Strategic Petroleum Reserve, part of the administration’s coordinated effort for “the largest release of global oil reserves in history.”

Mr. Biden blamed corporate greed for high gas prices.

“This is a time of war, global peril, Ukraine,” he said. “These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product.”

Industry executives and economic experts say U.S. refineries are already close to maximum production.

“Refineries are operating at about 95% of capacity, so there’s really not much more they can do,” said Jonathan Lesser, president of Continental Economics and adjunct fellow at the Manhattan Institute.

“Secondly, you’ve got Secretary of Energy Granholm saying, ‘Oh, we’re not going to need any of this in five to 10 years,’” he said. “Why would anyone invest billions of dollars to expand refinery capacity and face all the environmental hurdles?”

He said there is no quick fix to the problem.

Energy Secretary Jennifer Granholm and other administration officials are scheduled to meet Thursday at the White House with major oil companies, including Chevron and Exxon Mobil.

Mr. Biden told major oil companies in a letter last week that “refinery profit margins well above normal being passed directly onto American families are not acceptable.”

He warned that he could use the Defense Production Act to force the industry’s hand.

The comments sparked a tense row between oil executives and the White House.

Chevron on Tuesday told Mr. Biden that if he is truly interested in blunting high gas prices, then his administration should stop demonizing oil companies and instead engage in “honest dialogue” about the importance of domestic production.

Mike Wirth, chair and CEO of the energy giant, said “clarity and consistency” from the White House on energy policy would do more to rein in gasoline prices than name-calling and threats.

Frank Macchiarola of the American Petroleum Institute said policymakers have been incorrectly focused on “short-term fixes in lieu of long-term solutions.”

“If Washington is serious about delivering relief to consumers, then they should be focused on policies that encourage increased U.S. production and address the global mismatch between energy demand and available supply,” he said.

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