AAMER MADHANI and JOSH BOAK
REHOBOTH BEACH, Delaware ( Associated Press) — President Joe Biden said Monday that he will decide by the end of the week whether he will support a federal tax holiday on gasoline, potentially saving US consumers as much as 18.4 cents a gallon.
“Yes, I’m considering it,” Biden told reporters after walking along the beach near his Delaware vacation home. “I hope to make a decision based on the data I’m looking for by the end of the week.”
The administration is increasingly looking for ways to rid the public of higher gas station prices, which began to rise last year and have risen since Russia’s invasion of Ukraine in February. Gas prices nationwide average just under $5 a gallon, according to the AAA.
Biden said members of his team are due to meet with major oil executives this week to discuss rising prices. Biden has lashed out at oil companies, saying they are making windfall profits when people experience soaring fuel costs and inflation. But Biden said he would not meet with oil executives himself.
“I need an explanation as to why they are not refining more oil,” Biden said.
The Biden administration has already released oil from the US strategic reserve and increased the amount of ethanol for the summer, in addition to sending out a letter to refiners last week urging them to increase their refining capacity. However, these efforts have not yet resulted in a significant reduction in price pressures, so the administration is now considering a gas tax holiday. Gasoline and diesel taxes help pay for roads.
Penn Wharton’s budget model released estimates Wednesday showing consumers saved on gas stations due to gas tax holidays in Connecticut, Georgia and Maryland. Most of the savings went to consumers rather than service stations and others in the energy sector.
Energy Secretary Jennifer Granholm warned in an interview on CNN’s State of the Union on Sunday that “Part of the problem with the gas tax, of course, is that it funds roads.”
But Treasury Secretary Janet Yellen noted on Monday that “consumers are really suffering from higher gas prices” and remains open for a gas tax holiday.
“This has been a significant burden on American families and I think while it’s not ideal, this is what should be seen as a policy to address this,” Yellen said in Toronto on Monday at a joint press conference with Deputy Canadian Prime Minister and Finance Minister Chrystia Freeland.
The gas tax waiver is likely to run into difficulties in congressional approval. Democrats have a narrow majority, and Democratic House Speaker Nancy Pelosi and Senate Minority Leader Mitch McConnell have expressed skepticism about such a move in the past.
A White House spokesman, while insisting on anonymity when discussing gas pricing options, said talks were ongoing and Biden wanted to explore every avenue to lower prices.
Refiners say their capacity to produce additional gas and diesel is limited, meaning prices could remain high unless demand starts to ease.
The American Petroleum Institute and US fuels and petrochemicals producers on Wednesday sent a joint letter to Biden saying that refineries are already operating at their maximum capacity, and nearly half of the shutdowns were due to facilities being converted to renewable fuel production.
“Today’s situation did not arise overnight and will not be resolved quickly,” the letter says. “To protect and strengthen US energy security and processing capacity, we urge you to take steps to encourage increased domestic energy production,” including new infrastructure and reduced regulatory burdens.
Walking along the beach with his daughter Ashley, granddaughter Naomi and granddaughter’s fiancé, Biden often stopped to chat with beachgoers who were on the June 19 federal vacation on the beach.
He took the moment to reassure inflation – the consumer price index rose to a nearly 40-year high of 8.6% in May from the same month a year ago – and growing warnings from economists that a recession could be around the corner.
“We’ll get through this guys,” Biden told one group of vacationers.
Last week, the Federal Reserve stepped up its efforts to curb inflation by raising its key interest rate by three-quarters of a point – the biggest increase in nearly three decades – and signaling a bigger rate hike.
Former Treasury Secretary Larry Summers told NBC’s Meet the Press Sunday that he estimates “the prevailing probability will be that by the end of next year we will see a recession in the American economy.”
Biden said he spoke with Summers, who served as secretary of the treasury in the Clinton administration, on Monday morning.
“There is nothing inevitable in a recession,” Biden said.
Boak reported from Baltimore. Associated Press contributor Rob Gillis contributed from Toronto.