While walking along a Delaware beach on Sunday, President Joe Biden said he is “considering” a gas tax holiday and he hopes to have a decision “based on data” by the end of this week. The comments come as gas prices continue to rise nationwide amid sustained inflation affecting the costs of everything from food and energy to new and used vehicles.
Here are five things to know about the potential gas tax holiday.
How much would people save at the pump?
A gas tax holiday would suspend the federal gas tax, which is currently 18.3 cents per gallon of gas. That would reduce the nationwide average price of gas from nearly $5 to $4.785. In Texas, the average price of gas would drop from $4.638 to $4.455 if the federal gas tax were suspended.
Biden would need the support of Congress in order to suspend the gas tax, something that has not been done since the tax’s inception, according to CBS News.
What is the gas tax?
In addition to the 18.3 cents per gallon federal gas tax, there is also a 0.1 cent per gallon Leaking Underground Storage Tank tax, according to the Committee for a Responsible Federal Budget. The revenue from these two taxes flows into the Highway Trust Fund, which is used to pay for transportation spending.
About $42 billion is expected to flow into the Highway Trust Fund this year with three-fifths of the funds coming from the federal gas taxes, according to CRFB. If the gas tax were suspended from March to December, the fund would lose $20 billion in revenue. It is unclear how much funding the Highway Trust Fund would lose out on if the tax were suspended now.
Each state also has its own gas tax. In Texas, the gas tax is 20 cents per gallon of gas, according to the Texas Comptroller of Public Accounts. The tax brought in $3.7 billion in revenue in 2018, making it the fourth-largest source of tax revenue in the state.
Other potential relief
Biden also said on Sunday he is also considering other relief measures, such as gas rebate cards.
“That’s part of what we’re considering, that’s part of the whole operation,” Biden told reporters.
In March, multiple bills were filed in Congress offering gas rebate cards and gas stimulus checks. One bill would offer families $300 a month for gas for the rest of the year, while another one would give Americans up to $360 per year to offset the rising costs of gas.
Gas prices slightly dropped after hitting all-time highs
The average price of gas in the U.S. is under $5 as of June 21 after hitting a record high of $5.016 on June 14, according to AAA. The same is true in Texas, where the average price of gas is $4.638, down from $4.695 on June 15.
The average price for a gallon of gas is $4.488 in the Midland area, according to AAA. This is down from an all-time high hit on June 11 of $4.517 per gallon.
Prices are continuing to rise
Fuel oil prices are up 106.7% since May 2021, the largest increase in the history of the Consumer Price Index reports, according to the May 2022 CPI report. Fuel oil prices increased 16.9% from April to May, the largest month-to-month price increase of any item tracked in the report.
Overall, prices for all items are up 8.6% year-over-year, the latest CPI report shows. Food costs have increased 10.1% since last year, energy prices have increased 34.6% and the cost of other items, such as vehicles, apparel and transportation, have increased 6% during this time.