Gas will remain above $4 despite tax holiday
The national average for a gallon of regular gasoline is nearly $2 more than a year ago
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Prices at the pump will still remain well above $4 even after federal gas tax is temporarily suspended, according to an industry expert.
On Wednesday, President Biden called on Congress to suspend federal gas and diesel taxes through September in an effort to ease the pain at the pump for cash-strapped motorists across the country.
If Congress heeds the president’s call, the suspension, in conjunction with the falling oil market, could cause prices to drop 30-35 cents per gallon to $4.65, according to Lipow Oil Associates President Andy Lipow.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UGA | UNITED STATES GASOLINE FUND - USD ACC | 61.40 | -1.71 | -2.71% |
| USO | UNITED STATES OIL FUND - USD ACC | 72.09 | -2.15 | -2.90% |
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The suspension of the federal excise tax is a temporary measure that will provide immediate relief to the consumer, helping them save 18 cents per gallon, "but it does nothing to increase supplies," Lipow told FOX Business.
On top of that, "this proposal is happening at the same time that the European Union is phasing in its ban on the purchase of Russian crude oil and refined products," Lipow added. "As that ban takes effect, the struggle to find alternative supplies will intensify and that could push up prices."
A woman pumps gas at a convenience store in Pittsburgh. (AP Photo/Gene J. Puskar / AP Newsroom)
The national average retail price for a gallon of regular gasoline has fallen slightly below $5. However, it's still sitting at $4.95 as of Wednesday, according to AAA.
"The price of gas is up dramatically around the world, and by almost $2 per gallon in America, since Putin began amassing troops on the border of Ukraine," the White House said Wednesday.
On Feb. 24, the day the Russians invaded Ukraine, the national average was $3.54 per gallon, which is $1.41 less than where prices are Wednesday, according to AAA data. About a year ago, prices were sitting at $3.06.
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Comparatively, when Biden took office on Jan. 20, 2021, the national average was $2.39 per gallon, according to data from AAA.
Biden is also calling on "states to take similar action to provide some direct relief, whether suspending their own gas taxes or helping consumers in other ways," the White House said.
If every state suspended their excise tax on gasoline, for example, the consumer would save on average 26 cents per gallon, according to Lipow.
However, those savings vary widely depending on where you live, he noted. For instance, in California, the state excise tax is 51 cents while in Texas it's 20 cents.
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In fact, California, which already has the most expensive gasoline in the country, is slated to raise its state excise tax on July 1.