Joe Biden and Sharice Davids want to cut the gas tax. It would do more harm than good

Suspending the federal tax on gasoline is a bad idea.

This may not be a popular opinion. Like everyone else, we’re upset at high gas prices, which average about $4.64 per gallon in Missouri and Kansas. The prospect of cheaper fuel is enticing, particularly in the middle of summer vacations and travel.

But suspending the tax, as President Joe Biden recommended this week, is not the answer. It may look good politically, but it would not have significant impact on gas prices. And it will damage the very programs designed to reduce fuel demand and improve transportation across the country.

Let’s do some math. The federal tax on a gallon of gasoline is 18.4 cents (diesel fuel is taxed at 24.4 cents a gallon). For a 15 gallon tank of gas, that’s a federal tax of $2.76. When it costs nearly $70 to fill that tank, the savings will be hard to see.

For a family filling up once a week, the tax savings over the three-month suspension would be about $41.

That small price break might still be worthwhile if the savings actually ended up in the consumer’s pocket. But there is no guarantee that will happen. Even if Congress can force oil producers and retailers to pass the tax savings on to motorists — a big “if” — increased demand could force the price right back up.

At that point, the holiday would mean nothing to your pocketbook.

In the meantime, it would cost the Highway Trust Fund an estimated $10 billion, a serious amount of money. The fund pays for highway construction and repair, and mass transit projects, too. Those public transportation uses are critical in reducing demand for gas.

The White House plan calls for holding the Highway Trust Fund “harmless” by transferring $10 billion from regular revenues to cover the shortfall. That disguises the true cost to taxpayers: You save $40 at the pump, but you pay $40 more in other taxes (or Washington borrows the money, which has to be repaid eventually, with interest.) That doesn’t seem like much of a bargain.

To his credit, Biden has taken other steps to ease the price of gasoline. He’s released oil from the Strategic Petroleum Reserve, for example, and expanded the use of gasoline-ethanol blends. Those steps should provide marginal relief.

Do not listen to Republican claims that the answer to high prices is to drill for more oil. In March 2017, the U.S. produced 9.2 million barrels of oil a day, and the price at the pump was $2.34 a gallon. In March 2022, the U.S. produced 11.6 million barrels a day — and the pump price was $4.31 per gallon.

The gas shortage is much more a function of the lack of refinery capacity in this country and the worldwide demand for oil, which has been exacerbated by the Russian savagery in Ukraine. It will take months, perhaps years, to untangle those problems and provide relief.

There is a more fundamental issue at stake, too. Like it or not, the world must accelerate the effort to wean itself from burning fossil fuels for energy. Climate change demands it. There is pain associated with the switch that is unavoidable, which consumers now see.

Reducing the federal gas tax would increase demand for fossil fuels, making a bad situation worse, not better. (Reducing state taxes on gas — as some have suggested — would also be harmful.)

To be fair, the gas tax — like most excise taxes — is regressive, which means it isn’t based on the ability to pay. That’s regrettable. At the same time, motorists can lessen the pain by driving less if possible, combining trips, using fuel-efficient automobiles or using mass transit.

Those strategies make sense now, and will make sense in a warming planet.

We understand Democrats’ push for a summer gas tax holiday before the midterm elections. Kansas’ Rep. Sharice Davids has been particularly aggressive on this issue. But it’s the wrong approach, at the wrong time.

This story was originally published June 22, 2022 at 12:17 PM.