The price at the pump peaked last week at $5.01 per gallon but has since pulled back slightly. Today, the national average for regular gas is $4.95 a gallon.
The proposal so far has been met with some skepticism. Chris Robinson, a senior analyst at Lux Research, says the federal tax holiday would provide minimal relief.
“Prices at the pump have increased from roughly $3.00 per gallon one year ago to roughly $5.00 per gallon nationally today,” Robinson told ConsumerAffairs. “As the federal gasoline tax is only $0.18, it only addresses a small fraction of the increase in prices to consumers.”
How much would consumers save?
If the average consumer purchases 50 gallons of gasoline per month, the savings would amount to $9 per month – or less than $30 over the three-month period. It’s also not clear whether every station would lower the price of gasoline by 18 cents per gallon. There is no federal rule that would require them to do so.
Assuming all gas stations passed along the full savings of the tax holiday to consumers, Patrick DeHaan, head of petroleum analysis at GasBuddy, has done a deeper dive into drivers of specific vehicles and has posted estimated three-month savings on Twitter. Here's what he says drivers could save:
Pickup truck: $66.24
Fullsize SUV: $55.20
Minivan/Mid-size SUV: $44.16
Fullsize: $35.28
Compact: $26.52
$6.3 billion in lost revenue
DeHaan also estimates that a federal gas tax holiday would cost the federal highway trust fund $6.3 billion in lost revenue.
The proposal comes amid the president’s war of words with leaders of the petroleum industry. In recent weeks, Biden has accused oil refiners of taking advantage of the oil shortage to increase profits. Oil executives have countered by pointing out that refineries are operating at near capacity. These officials have criticized the Biden administration's energy policy for being hostile to their industry.
“While the Biden administration has put some pressure on oil and gas companies to respond to high prices with increased supply, companies are hesitant to invest capital into refining capacity due to the threat of a decrease in demand from electric vehicle sales,” Robinson said.