Fuel prices at a Chevron gas station in San Francisco June 9, 2022.
Bloomberg | Bloomberg | Getty Images
For months, drivers throughout the U.S. face have confronted eye-popping prices once they replenish their gas tanks.
Now, President Joe Biden is weighing a new treatment — a federal gas tax holiday.
A gallon of gas now prices an average of $4.97, in accordance with AAA. That’s a slight enchancment from earlier this month, when the nationwide common crossed the $5 threshold for the first time. But prices are up from $4.59 a month in the past and $3.07 a 12 months in the past.
However, in some states — like Washington, Oregon and Nevada — common gas prices are greater than $5.50 per gallon. In California, the common is presently $6.38 per gallon.
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The federal gas tax quantities to 18.4 cents per gallon, whereas states individually impose their very own levies.
In February, Democratic Sens. Maggie Hassan of New Hampshire and Mark Kelly of Arizona proposed a bill that will droop the federal gas tax by way of the finish of the 12 months.
The thought is getting new consideration from Biden’s administration, with Treasury Secretary Janet Yellen calling it “an concept that’s actually price contemplating” in a Sunday interview with ABC News’ “This Week.”
When requested about Yellen’s feedback, Biden said on Monday he’s contemplating it.
Gas tax financial savings for shoppers could be minimal
The thought of quickly eliminating the federal gas tax has drawn some criticism.
A report from the Penn Wharton Budget Model at the University of Pennsylvania launched in March discovered that savings from such a break would unlikely be very substantial for shoppers.
The financial savings per individual may be solely round $50 if it have been applied in March by way of the finish of the 12 months, Kent Smetters, a professor at the University of Pennsylvania’s Wharton School informed CNBC at the time.
Moreover, federal tax income could be lowered by about $20 billion if a gas tax holiday have been put in place by way of the finish of this 12 months, in accordance with the March report.
Gas taxes fund a lot of vital highway security packages.
Andrew Gross
AAA spokesperson
The downside is that the majority of the financial savings from these modifications — whether or not they occur at the federal or state degree — is not going to be handed on to the client, Smetters stated.
It might also mean much less cash for the Highway Trust Fund, which funds roads and bridges, in addition to different transportation prices. The Senate invoice proposes changing the tax income that usually goes to the Highway Trust Fund with transfers from the basic fund.
Federal taxes make up a small portion of what shoppers spend on gas, in accordance with AAA spokesperson Andrew Gross.
The value of oil is the largest determinant of the value of gas, at about 56%, he stated. The relaxation consists of about 14% for refining, 15% for distribution and advertising and the remaining 15% for federal and state taxes.
AAA has opposed the proposed federal laws alongside different organizations together with the American Association of State Highway and Transportation Officials and the American Society of Civil Engineers.
“Gas taxes fund a lot of vital highway security packages,” Gross stated. “And it isn’t like our highway security wants will take a holiday, too.”