Federal gas tax exemption is a mistake | News, Sports, Jobs
U.S. motorists and commercial drivers don’t need three-month federal gasoline and diesel taxes “holiday” proposed by President Joe Biden. The brief tax break could do more harm than good. It is not difficult to understand why.
The price of fuel is built on supply and demand. Generally, in the event of a drop in supply, the price increases, encouraging motorists to save. If demand falls significantly, the price, under normal economic circumstances, falls.
With gas prices hovering just below, at, or slightly above $5 a gallon, the President’s proposed 18-cent-a-gallon cut really won’t mean much to average motorists.
The federal diesel fuel tax is 24 cents.
It is estimated that if the proposed project “holiday” the savings were fully passed on to average motorists nationwide, they would only save about 3.6% at the pump.
Meanwhile, federal officials estimated the three-month waiver would result in a loss of $10 billion in
money for the construction of highways.
Rather than implementing Biden’s idea, it would be better if as many motorists as possible worked to reduce some of their unnecessary trips and, thus, reduce their gas purchases. A sustained effort on their part would have a positive effect on gas pumps over time.
Biden’s plan would have the opposite effect.
In its June 23 edition, the Wall Street Journal reported that “Consumers are beginning to temper their fuel purchases in response to historically high prices.”
The Journal reported the opinion of Garrett Golding, a business economist at the Federal Reserve Bank of Dallas, that with inflationary pressures driving up the prices of many consumer goods and wages not keeping pace, consumers are ill-equipped to deal with a prolonged increase in fuel prices. prices.
Andrew Clyde, chief executive of Arkansas-based fuel retailer Murphy USA Inc., which operates stores in 27 states, said consumers were buying slightly less at the pump while visiting more frequently. He said it is reminiscent of how drivers reacted in 2008, when they sought out the cheapest gasoline, changed fuel grades and ultimately reduced the number of miles driven.
Eventually, these strategies contributed to a price reversal.
Unfortunately, the travel and tourism industries suffer when these strategies take hold, and tourism provides a significant economic boost to Pennsylvania.
As motorists consider the best driving options available to them to keep more money in their pocketbooks and pocketbooks, they need to understand that some of the challenges surrounding the fuel prices in question will be difficult to overcome. For example, Russia’s war in Ukraine continues to impact fuel prices around the world.
The fact that U.S. refineries since before the pandemic have cut capacity by about 800,000 barrels a day has also helped gasoline prices climb to record highs.
The war in Ukraine alone should be a major incentive for patriotic conservation for Americans, but the Biden administration must also rethink its ideas to address the price issue.
The real opportunity to beat today’s gas price enemy lies with everyone who has a driver’s license, not some dodgy temporary gimmick that is likely to do more harm than good.