President Joe Biden calls for a federal gas tax holiday at the White House on June 22.
Photo:
KEVIN LAMARQUE/REUTERS
Let’s call the roll on President Biden’s ideas to reduce high gasoline prices. He’s tried lobbying the Saudis, to no avail. Releasing oil from the U.S. strategic reserve; the market yawned. Attacking oil and gas companies for not drilling or refining enough, but he also wants to put those companies out of business.
Now comes the feeblest effort so far—a White House request on Wednesday that Congress suspend the 18.4 cent a gallon federal gas tax for three months. That’s only long enough to reduce the irritation of drivers, er, voters, every time they fill up the tank during the summer driving season. Has there ever been a more transparently cynical vote-buying policy exercise? Ah, yes, we forgot student-loan cancellation.
Democrats have long mocked the idea of a gas tax holiday. In 2008, running against
John McCain,
Barack Obama
dismissed it as a political “gimmick.” This spring Speaker
sniffed at the idea when Democratic Senators in competitive 2022 races endorsed it. She claimed oil companies wouldn’t pass the relief to consumers, and Treasury Secretary
Janet Yellen
has echoed that view.
The federal gas tax is levied when fuel leaves a refinery or is imported rather than at the point of sale. So a suspension would take time to filter to consumers and could be swamped by increases in the market price of crude. If crude prices climb to $140 a barrel in the coming months—and they could—drivers might not even notice the tax holiday.
That’s what happened when the Administration tapped the Strategic Petroleum Reserve last autumn as prices hit $3.50 a gallon. The government has since released about 150 million barrels of crude and intends to auction off another 90 million barrels by November.
Yet rising global demand for fuel amid the pandemic recovery has more than offset the additional supply. And for every barrel the U.S. has released, China has sopped up one more—buying Russian crude at a steep discount to fill its stockpile.
A federal gas-tax holiday could also rob the Highway Trust Fund of about $25 billion a year in revenue, which was supposed to go toward funding last year’s bipartisan infrastructure bill. Mr. Biden says Congress shouldn’t rob the highway fund, but Congress would have to deficit spend or find revenue somewhere else.
In recent months, a shortage of refining capacity has been driving up gasoline prices. Mr. Biden ordered U.S. refiners last week to come up with short-term solutions to increase capacity—or else. But Mr. Biden won’t take regulatory steps to ease the refinery shortage such as reducing renewable fuel mandates. He also won’t issue a waiver to the Jones Act for transporting fuels. He refuses to take any action that would challenge the climate lobby.
One result is that
can’t find a buyer for its aging Gulf Coast refinery, notwithstanding the industry’s current hefty profits. The refinery plans to shut down by the end of next year, which could push up gasoline prices even more. Mr. Biden could help lure a buyer by suspending all policies aimed at punishing fossil fuels, but he won’t.
The gap between fuel demand and supply isn’t a short-term problem that will vanish with a cease-fire in Ukraine. The International Energy Agency last week warned that the “global oil supply may struggle to keep pace with demand next year.”
CEO
Darren Woods
warned Tuesday that supply could remain tight for five years. The only good news on the supply side of late has been Mr. Biden’s grudging concession to meet Saudi Crown Prince
Mohammed bin Salman,
whom he previously called a “pariah.”
Mr. Biden’s energy policy is a jumble of incoherence. He wants political relief from high gas prices but only to get past the next election. What the U.S. oil and gas industry and American consumers need is a permanent regulatory holiday to increase domestic supply. Anything else is a holiday from reality.
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