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Biden to Urge Gasoline Tax Pause as Prices Drag on Democrats

US President Joe Biden (Photo: Ting Shen/Bloomberg)

President Joe Biden will ask Congress to suspend the federal gasoline tax for three months, after his administration’s previous efforts failed to curb soaring pump prices that weigh heavily on his party’s political fortunes.

Biden will call for a pause in tax collections through September in a speech scheduled for 2 p.m. Wednesday in Washington, senior administration officials said. The national average gasoline price hit a record this month above $5 a gallon, even after Biden ordered a historic release from US reserves earlier this year.

Any pause, however, is fraught with contradiction. Lowering the price of gasoline may spur demand, potentially exacerbating supply imbalances already roiling markets. Biden entered office describing climate change as an existential threat and pledging to scale back US drilling; he’s now calling for measures to make fossil fuels less expensive, while all but begging oil companies to boost production and refining.

And it’s unlikely Congress will heed the president’s request, as many Democrats have concerns about the move and Republicans aren’t inclined to help Biden with his biggest political liability ahead of a critical election in November.

As part of any suspension, Biden wants to reallocate other federal funding to make up the estimated $10 billion hit to the Highway Trust Fund, which is supported primarily by gas taxes, according to the officials. They asked not to be identified as a condition of participation in a briefing.

Biden will ask that both the 18-cent-per-gallon federal tax on gasoline and the 24-cent-per-gallon tax on diesel be suspended, the officials said. That would be in addition to any state-level suspensions.

“Together, with the average cost of taxes at the state level of about 30 cents, that can give the American public about 50 cents off a gallon,” Amos Hochstein, the State Department’s senior adviser for energy security, told CNN Wednesday morning.

Read more: Biden Escalates War of Words With Big Oil Ahead of Talks

Gasoline prices, a key driver of inflation that’s hit a four-decade high, have emerged as Biden’s foremost political problem as Democrats face losing control of one or both chambers of Congress in the November midterms.

But pausing gasoline tax collections isn’t likely to be the answer. Congressional Republicans, who control 50 seats in the Senate, are making Biden’s economic policy and his failure to curb gasoline prices and broader inflation the centerpiece of their midterm campaign. And some Democrats oppose waiving the tax out of concern the policy would undermine highway maintenance.

House Speaker Nancy Pelosi and others have questioned whether a pause would result in lower prices for consumers at the gas pump.

There’s even a risk of a backfire. Some states that paused their own fuel taxes saw prices come back higher than they would have been without a suspension, according to a study by the Wharton School at the University of Pennsylvania.

Read more: Biden Is Mulling a Federal Gas Tax Holiday. It Might Not Work

Nonetheless, some states have already moved to relieve motorists of gas taxes. The governors of Connecticut and New York have suspended their state taxes, while the governors of Illinois and Colorado have delayed planned tax and fee increases.

Connecticut’s gas tax suspension ends this month, while New York’s began June 1 and will extend for seven months.

In his speech, the president also will call on refiners and retailers to funnel through more savings to consumers, the officials said, the latest salvo in his brewing feud with the oil sector, which he blames for price gouging and for doing too little to maintain pumping and refining capacity in the US.

On Tuesday, Biden rebuked the chief executive of Chevron Corp., Mike Wirth, after Wirth published a letter calling for Biden to stop criticizing the industry and make a “change in approach” to US energy policy. Biden told reporters, “I didn’t know they’d get their feelings hurt that quickly.”

How the ‘Energy Shock’ Has Upended the Global Economy: QuickTake

On Tuesday, Biden and a top economic aide downplayed concerns often cited in opposing a gas tax suspension — that it would curb revenues needed to maintain roadways, or that savings wouldn’t be passed on to consumers. Biden said last year’s infrastructure law can fill the gap on funding, while adviser Heather Boushey said state-level pauses already in place show that consumers do benefit.

“We have a giant infrastructure bill we passed — giant,” Biden said, referring to the infrastructure law last year that added $550 billion in new funding for construction of roads, airports, ports and other public works. “It’s not like before. Look, it will have some impact but it’s not going to have an impact on major road construction and major repairs.”

(Updates with background, Hochstein comment from third paragraph)

–With assistance from Akayla Gardner.

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