The gas price situation has become so dire that President Biden has now asked Congress to consider a three-month gas tax holiday.
As we’ve said before, a gas tax holiday won’t provide much relief at the pumps. That said, if the federal government suspended its 18 cent tax and the state suspended its 35 cent tax at the same time, consumers would save more than 50 cents per gallon. And that would add up to noticeable savings quicker than a state or federal holiday alone.
But a gas tax holiday still presents the same problems: A huge loss of tax revenue and no guarantee companies will pass the savings on to consumers. Plus, Sen. Manchin has already made it clear he won’t support a tax holiday, and few (read: zero) Republican members of Congress are likely to support Biden’s plan.
We can’t fault Biden for trying. He’s desperate to bring relief to Americans who are struggling, even as a vocal minority insist on ignorantly blaming the president for gas prices.
We’ve addressed this before, too, but obviously some people didn’t get the memo: Gas prices are based on crude oil prices. Oil prices are determined by the global market.
As much as he may wish to, Biden can’t call up OPEC and demand it lower the per barrel cost of oil.
The pain we’re feeling at the pump is the result of a confluence of factors: normal summer price increases, supply and demand imbalances caused by COVID and Russia’s war on Ukraine causing a massive fuel shortage.
Gas prices tend to rise in the summer every year. In early spring, about a quarter of refineries undergo maintenance, which shuts them down temporarily and limits supply, according to the Association for Convenience and Fuel Retailing. In late spring into early summer, refineries start producing a summer blend of gasoline, and the switchover usually causes a spike in prices. And, of course, gas companies expect an increase in demand as people travel during summer break, so they add a few extra cents to the cost.
When the pandemic first struck in early 2020, it was like the whole world was stuck in limbo. Everything just … stopped. People stopped traveling for work, school — and fun. The demand for gas plummeted. And when there’s no demand, supply slows down. So oil production and refining dropped and stayed low for almost two years. Almost as soon as vaccines became available, though, everything started back up — quickly. All the sudden, the demand for gas skyrocketed and production was slow to catch up.
Just as oil prices looked like they might dip down as production ramped up, Russia decided to invade Ukraine. Russia is one of the world’s top crude oil producers, mainly supplying Europe. When NATO agreed to put sanctions on Russia, it essentially removed Russian oil from the global supply. That, in turn, has contributed to a worldwide shortage. And if Americans think gas is expensive here, they’d be aghast at European gas prices, which are ranging from $7 to $10 (U.S.) per gallon. Unless Biden became the head of the European Union while no one was paying attention, it seems extraordinarily unlikely high gas prices are his fault.
We’d be remiss if we didn’t also mention that oil companies like Exxon, Shell, BP and Chevron are making billions of dollars in profit every month.
So the oft-repeated line that high gas prices are Biden’s fault is not only false and ignorant — it’s also deliberately unhelpful. Just like Biden didn’t singlehandedly create the cost crisis, he can’t singlehandedly stop it. Instead of scapegoating the president, members of Congress need to step up and help craft real, nuanced solutions to this very real, nuanced problem.