WASHINGTON –– As fuel prices soar amid record inflation and Ukraine’s crisis, some Congressional Democrats are pushing for a temporary pause in state gas taxes. But critics warn that rescuing Americans at the pump could cost the country in the long run.
Rep. Kim Schrier, who represents a district stretching from Wenatchee to the Seattle suburbs, is one of several House and Senate Democrats who introduced a bill earlier this month that would suspend the federal tax that the Americans cost an additional 18.4 cents per tax gallon through the end of the year.
“When I talk to voters, they tell me they’re worried about inflation,” Schrier said. “Every time they fill up the tank, the price is so much higher. … This is one way to bring relief to people right now.”
While January CPI inflation rose 7.5% last year, gas prices have risen much faster. According to the AAA, the national average gas price was $3.53 on Wednesday, more than 33% higher than a year earlier.
Russia’s incursion into Ukraine has unsettled global markets and could send crude oil prices higher, with those increases being reflected in the prices Americans pay at the pump. With few options available to the Biden administration to lower fuel costs in the short term, Schrier said suspending the gas tax is the most immediate step Congress can take.
However, the state gas tax is the primary source of revenue for the Highway Trust Fund, which pays for road and bridge repairs, and is a key source of funding for the bipartisan infrastructure bill passed by Congress in August 2021. Critics say suspending the tax would be fiscally irresponsible and could depress the fund – which is expire by 2027 – Closer to bankruptcy.
The bill would require the Treasury Department to replace lost revenue going to the Highway Trust Fund with transfers of money from the federal government’s general fund. But Maya MacGuineas, president of the bipartisan committee on responsible federal budgets, wrote in an op-ed in The Hill that “robbing Peter to pay Paul would still add to our massive national debt.”
While the bill would require the Treasury Department to oversee the program and ensure oil and gas companies are passing the savings on to consumers, MacGuineas argued it would be difficult to stop those companies — as well as dealers and gas stations — from making savings cash in and leave the company small price drop at the pump.
President Joe Biden said at the White House on Tuesday that his administration would use “every means at our disposal” to protect consumers from rising fuel prices, but warned that “defending freedom” with sanctions against Russia “also for will cost us. ”
On Tuesday Rep. Cathy McMorris Rodgers, a Republican representing east Washington, urged the United States to increase domestic oil production to control prices amid the crisis in Ukraine. Biden said his administration is working with other oil-producing countries to boost global production, which has slumped amid slumping demand in the first year of the COVID-19 pandemic.
Biden has tried to balance efforts to reduce the country’s dependence on fossil fuels with the reality that the US economy and transportation system are still heavily dependent on oil and gas. Schrier said while she works to help the country transition to cleaner energy sources, Americans need affordable gasoline until electric vehicles are cheaper and the infrastructure needed to support them is built.
“You build up the clean energy resources first and then phase out the use of fossil fuels,” she said. “It doesn’t work the other way around.”
The proposal for a state gas tax exemption comes as inflation stokes concerns among Democrats about their prospects in the November midterm elections. Most lawmakers behind the bill, including Schrier, face tough re-election battles in competitive states and counties.
Republicans blame worsening inflation on Biden and Congressional Democrats after passing a $1.9 trillion stimulus package a year ago, after Congress passed two previous stimulus packages under former President Donald Trump . However, Schrier pointed out that inflation has been picking up around the world, largely due to supply chain disruptions related to the pandemic.
Global inflation averaged 5.2% from December 2020 to December 2021, according to the financial analysis firm IHS Markit. During the same period, inflation in the United States was 7%.