Will President Biden’s gas tax holiday help Texas motorists? The answer may surprise you
President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes for three months — an election-year move meant to ease financial pressures that was greeted with doubts by many lawmakers.
The Democratic president also called on states to suspend their own gas taxes or provide similar relief, and he delivered a public critique of the energy industry for prioritizing profits over production. It would take action by lawmakers in Washington and in statehouses across the country to actually bring relief to consumers.
President Joe Biden on Wednesday called on Congress to lift federal taxes on gas through the end of September. He also asked states to suspend their own gas taxes or provide similar relief.
The election year move meant to ease financial pressures was greeted with doubts by many lawmakers. But many consumers are wondering how might this help them.
For Texans, the proposal comes at a time when they’re paying $4.62 a gallon on average at the pump, $1.88 more than a year ago.
While the action is intended to bring drivers some relief in the short-term, how much would Texans actually save during those three months?
The tax holiday would suspend the federal gas tax, which is 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel. That would bring the average price of a gallon of gas down to $4.44.
Because the federal tax makes up only about 4% of a gallon’s cost, it’s not going to generate large savings for Texas drivers, says AAA Texas spokesperson Daniel Armbruster.
With the average size gas tank needing 14 gallons, the tax holiday would create an average savings of $2.58 per fill-up. For a truck, at a 20-gallon capacity, you would save $3.68.
Texans still have to pay a 20 cent state tax for each gallon, unless the Texas Legislature implements a state gas tax holiday.
While it won’t amount to much savings, the federal gas tax holiday could actually have a negative impact on Texas drivers, Armbruster says, because those taxes are often used to build and maintain transportation infrastructure.
“You’re now creating a potential funding gap for roadway and bridge improvements that are much needed in many areas of the country, including here in Texas,” he said.
The biggest thing that impacts the price of gas is the price of crude oil, so if you have rising crude prices, that can have an outsized role in pushing pump prices even higher, Armbruster said.
“The president is limited in what effect they can have, because crude oil prices are set by global markets, and most of what we pay when you break down a gallon of gas, more than 50% of that gallon of gas is the cost of crude oil,” he said.
This story was originally published June 22, 2022 at 12:53 PM.
