WASHINGTON – With fuel prices rising amid record inflation and the crisis in Ukraine, some Democrats in Congress are pushing for a temporary pause on the federal gas tax. But critics warn saving Americans at the pump could cost the country in the long run.
Rep. Kim Schrier, who represents a district that stretches from Wenatchee to the Seattle suburbs, is one of several Democrats in the House and Senate who introduced a bill earlier this month that would suspend the federal tax, which costs Americans an extra 18.4 cents per gallon, through the end of the year.
“When I am out talking with constituents, they are telling me they’re worried about inflation,” Schrier said. “Every time they go and fill up the tank, the price is so much higher. … This is a way to offer people relief right now.”
While inflation rose by 7.5% over the past year, according to the consumer price index for January , gas prices have jumped far faster. According to AAA, the national average gas price Wednesday was $3.53, more than 33% higher than a year earlier.
Russia’s incursion into Ukraine has unsettled global markets and could drive crude oil prices higher, with those increases being reflected in the prices Americans pay at the pump. With few options at the Biden administration’s disposal to cut fuel costs in the short term, Schrier said suspending the gas tax is the most immediate move Congress can make.
The federal gas tax, however, is the main source of revenue for the Highway Trust Fund, which pays for road and bridge repairs and is a major source of funding for the bipartisan infrastructure bill Congress passed in August 2021. Critics say suspending the tax would be fiscally irresponsible and could push the fund – which is on track to run out by 2027 – closer to insolvency.
The bill would require the Treasury Department to replace the lost revenue going to the Highway Trust Fund by transferring money from the federal government’s general fund. But Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, wrote in an op-ed in The Hill that “robbing Peter to pay Paul would still increase the size of our massive federal debt.”
While the bill would require the Treasury Department to monitor the program and ensure oil and gas companies pass on the savings to consumers, MacGuineas argued it would be hard to prevent those companies – as well as distributors and gas stations – from pocketing savings and leaving a scant reduction in prices at the pump.
At the White House on Tuesday, President Joe Biden said his administration would use “every tool at our disposal” to protect consumers from rising fuel prices, but warned that “defending freedom” with sanctions on Russia “will have costs for us as well.”
On Tuesday, Rep. Cathy McMorris Rodgers, a Republican who represents Eastern Washington, called for the United States to ramp up domestic oil production to help control prices amid the crisis in Ukraine. Biden has said his administration is working with other oil-producing countries to increase global production, which declined amid slumping demand during the first year of the COVID-19 pandemic.
Biden has sought to balance efforts to reduce the nation’s dependence on fossil fuels with the reality that the U.S. economy and transportation system still rely heavily on oil and gas. Schrier said while she is committed to helping the country transition to cleaner energy sources, Americans need affordable gasoline until electric vehicles are cheaper and the infrastructure needed to support them is built.
“You build up the clean energy resources first, and then you back off on fossil fuel use,” she said. “You can’t do it in the other direction.”
The proposal for a federal gas tax holiday comes as inflation drives Democrats’ concerns about their prospects in November’s midterm elections. Most of the lawmakers behind the bill, including Schrier, are facing tough reelection fights in competitive states and districts.
Republicans blame Biden and congressional Democrats for worsening inflation by passing a $1.9 trillion stimulus bill a year ago, after Congress passed two earlier stimulus bills under former President Donald Trump. Schrier pointed out, however, that inflation has increased around the world due largely to supply chain disruptions linked to the pandemic.
Inflation averaged 5.2% globally from December 2020 to December 2021, according to the financial analysis firm IHS Markit. Over the same period, inflation in the United States was 7%.