Biden nears decision on federal gas tax holiday
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WTI crude prices (CL1:COM) have eased from $120 to $110 a barrel over the past week, while the national average gas price dipped under $5 a gallon, but the cost of energy still remains at elevated levels. Biden administration officials are still scrambling to contain the fallout, with the record prices being one of the biggest contributors to inflation. The White House already turned to the Strategic Petroleum Reserve in March, ordering the release of up to 1M barrels of oil a day for 180 days in the hopes of meeting demand, but its intended effect has been negligible.
Next plan: President Biden is considering the idea of a federal gas tax holiday and "hopes to have a decision based on the data I'm looking for by the end of the week." Any suspension of the 18.4 cents a gallon tax would require action from Congress and would be unprecedented. There has never been a federal gas tax holiday in the history of the U.S., while past breaks on state gas taxes have mostly been limited to a few days.
So far, Democratic-led attempts to temporarily pause collecting the tax have failed to gain traction in Congress. Critics say the oil companies could pocket the tax relief without passing the savings on to consumers, or that it only makes up a small fraction of the overall cost of gasoline and goes to fund much-needed road and bridge improvements. Senate Minority Leader Mitch McConnell (R-KY) has also accused Democrats of playing "political games," with the proposed tax relief expiring soon after midterm elections in November.
Go deeper: Biden is planning to visit Saudi Arabia next month to discuss the energy situation, while Treasury Secretary Janet Yellen said talks are ongoing on how the U.S. and its allies could cap the price of Russian oil exports. Yellen also rejected the idea of reviving TC Energy's (NYSE:TRP) Keystone XL oil pipeline project, which was canceled by Biden on his first day in office. "I don't think it's something that even if it were allowed, would take years to come into completion, so I don't see it as a short-term measure to address the current situation," Yellen told reporters in Toronto. "And longer term, we remain committed to our climate change objectives. But, you know, it's really up to the president to consider."
Related gas station operators: BP (BP), Chevron (CVX), Conoco (COP), Costco (COST), Exxon Mobil (XOM), Hess (HES), Marathon (MRO), Phillips 66 (PSX), Sunoco (SUN), Shell (SHEL) and Valero (VLO).