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Suspending the gas tax is a gimmick

The Boston Globe logo The Boston Globe 2 days ago Editorial Board
Stratospheric Fuel prices have broken records, with the average national price of regular gas hovering at around $5, according to the American Automobile Association. © David Paul Morris Stratospheric Fuel prices have broken records, with the average national price of regular gas hovering at around $5, according to the American Automobile Association.

There’s no sugarcoating the devastating impact of skyrocketing gasoline and diesel prices. For many working Americans, driving a car or truck isn’t optional; when gas prices surge, as they have this year, the extra money going to gas effectively reduces their incomes dollar for dollar. Meanwhile, rising diesel prices propel inflation across the whole economy, since so many consumer goods travel by diesel-powered trucks or trains.

Right now, the average national price of regular gas is hovering at around $5 per gallon, according to the American Automobile Association, almost twice what it cost a year ago. And so on Wednesday, with public anger over prices mounting, President Biden called on Congress to suspend the federal gas and diesel taxes for three months and urged states to suspend their levies, too, as a way to ease the burden on motorists.

Waiving the gas tax is, as Barack Obama once described it, a gimmick. Even if Congress and the states followed Biden’s lead, the impact would likely be modest. The federal gas tax is about 18 cents a gallon, and state gas taxes average about 30 cents a gallon (the tax in Massachusetts is 24 cents). In a best-case scenario, in which the tax cut would be passed on entirely to consumers, that still means gas would cost around $4.50 a gallon.

And the gimmick comes at a price: The purpose of the gas tax is to fund transportation projects, and suspending tax collections will cost about $10 billion, according to the White House. Undermining public infrastructure finances to solve a short-term crisis doesn’t make sense. As for states, legislative leaders in Massachusetts have already wisely rejected calls for a state gas tax holiday.

But if not a tax holiday, then what? Another idea floated by some progressives, to restore a ban on petroleum product exports, would be even worse, punishing US allies who rely on American exports just as the West is trying to maintain its unity in the Ukraine war.

The problem for Biden is that the federal government’s most effective ways to cut Americans’ gasoline bills all take time. Both getting more fuel-efficient cars onto the road and investing in mass transit would protect Americans from future price spikes — but would do little to help them weather this one.

Since gasoline and diesel are both refined from oil, the traditional short-term responses to high prices from US presidents have been to release oil from the nation’s strategic petroleum reserve or lean on Saudi Arabia to pump more crude. Neither option looks very appealing right now. There’s still plenty of oil in the nation’s reserve, but previous releases have done little to moderate rising prices. And if the price of Saudi cooperation means ignoring its increasingly repressive and belligerent conduct, that could be too high a price to pay. Biden is set to meet next month with the kingdom’s de facto leader, Crown Prince Mohammed bin Salman, but he should hold the line on US criticisms of bin Salman’s human rights record.

One alternative, off-the-shelf solution would be to restore the Child Tax Credit, a program that expired at the end of the last year. That’s obviously an imperfect solution — not every driver has children, not every family has a car — but it would come with a host of other benefits, including cutting poverty. The administration could also work with refiners to use more of their existing capacity to produce diesel and gasoline instead of other petroleum products.

To Biden’s critics, the obvious answer to higher gas prices is to drill more oil domestically. But gasoline is a global commodity. Even if the United States greatly increased its own production, Saudi Arabia and its OPEC allies would still likely be able to manipulate global oil prices, and sudden crises like the Ukraine war would still probably send prices soaring. This summer of rising prices should be further impetus for Congress and the administration to reduce the country’s overall exposure to energy volatility — by reducing its dependence on oil.

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