Berliner Tageblatt - Biden seeks fuel tax suspension to help fight inflation pain

Biden is asking Congress to suspend the federal fuel tax for three months as price increases -- in large part spurred by fallout from President Vladimir Putin's invasion of Ukraine and subsequent Western sanctions on Russia -- drive general inflation.

It seems unlikely so far that Congress will give the green light.

The White House wants to lift the 18 cents a gallon federal tax on gasoline and 24 cents a gallon on diesel until September, and will call on state governments to suspend their own taxes to "provide direct relief to American consumers who have been hit with Putin's price hike," a senior administration official said.

The official noted that gasoline prices -- now averaging near $5 per gallon (3.78 liters) -- had gone up almost $2 since the start of the Ukraine invasion.

"The president recognizes the significant challenge that high gas prices pose to working families," the official said, while conceding the tax suspension alone would not offset household costs.

A handful of states including New York and Connecticut have already suspended fuel taxes or delayed planned tax increases.

But according to analysts, some 46 states have yet to act, including Democratic-governed California, where gasoline is the most taxed and the most expensive, at well over $6 a gallon.

Federal tax revenues on gas and diesel help pay for the Highway Trust Fund, which maintains roads and supports public transport, but Biden will call on Congress to ensure the estimated $10 billion gap that would be caused by a three month tax break is made up from other sources.

Whether Congress, where Democrats hold only a narrow majority over Republicans, will pass tax relief is a big question. Even Biden's backers are lukewarm.

"I've not been a proponent," Steny Hoyer, a senior leader of the Democratic party in Congress, told Politico. "I just don't know that it gives much relief."

Jason Furman, a former top economic adviser to president Barack Obama -- who himself once dismissed so-called gas tax holidays as a "gimmick" -- also said the move would not help regular people.

"It would be very unlikely that gas prices would fall by more than a dime because of this change. And oil company profits would go up by billions of dollars," he told NPR.

- Biden's populist mission -

Biden will urge retailers at filling stations to apply any tax cuts immediately, as well as push refiners to expand their crude-processing capacity in hope that the combined measures could cut the price of gasoline by as much as a dollar a gallon.

He has previously tried other measures, including releasing a million barrels of oil a day from the Strategic Petroleum Reserve, negotiating the release of an additional 60 million barrels from international partners, and expanding access to biofuels.

Nothing so far has had an appreciable effect.

With Democrats fearing a severe defeat in November midterm elections -- thereby leaving Biden weakened for the rest of his first term in office -- the president has turned to an increasingly populist message, portraying himself as fighting for the middle class against profiteering big oil.

The White House recently called out groups including ExxonMobil and Chevron, denouncing their profit margins as "well above normal" and calling it their patriotic duty to increase output.

"Exxon has made more money than God this quarter," Biden has said.

Energy Secretary Jennifer Granholm is due to meet with refiners Thursday to urge them to contribute to these measures, including increasing their production output.

On Tuesday, Biden dismissed a complaint from Chevron's CEO that the industry was being vilified.

"I didn't know they’d get their feelings hurt that quickly," Biden said.

N.Fournier--BTB