With the Americans facing the, elected naturally eager to lower prices at the pump. State governors from Washington to Florida have slashed gasoline taxes, while the White House is re-throwing the idea of tapping the United States’ emergency oil reserves.
It’s no mystery why: research shows that public disapproval of sitting presidents tends to rise with the cost of a fill-up. For those in power, it is therefore essential to at least appear to be doing something – anything – against soaring gas prices.
“The person in the White House is responsible for what we see at the pump, in the public imagination – there’s no question about that,” said historian Meg Jacobs, author of “Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s. “That was true in the 70s. It remains true today.”
Beyond the political lens, however, is there anything that can actually be done to lower gasoline prices? Here are the options that were suggested.
Suspend gasoline tax
This week, two Democratic senators introduced a bill to suspend the federal gas tax for the rest of the year. At 18.4 cents per gallon, removing the tax could provide significant relief to consumers. This would save a typical SUV driver almost $3 each time he fills up.
At the state level, politicians in Florida and Rhode Island have proposed eliminating the state fuel tax altogether. Other states, such as California and Illinois, have suggested freezing gasoline taxes at their current levels rather than allowing automatic tax increases.
“I think this will be a trend that will become more common in the United States in 2022, especially with the midterms coming later this year,” said Troy Vincent, principal analyst at the commodity research firm. DTN, at CBS MoneyWatch. “There’s going to be more political sensitivity in the price of oil and… coming into election season, that’s going to be a problem.”
The amount a tax holiday could save consumers varies by state, with gasoline taxes ranging from 15 cents per gallon in Alaska to 67 cents in California, according to the Tax Foundation.
Rely on oil producers
Late last year, President Biden asked theoil companies were illegally keeping gasoline prices high, noting that producer costs at the time were falling even as gasoline prices were rising.to examine whether
Analysts were skeptical of the merits of Mr Biden’s specific argument, although they noted that the oil industry has a history of monopolistic stocks. However, the president could still use his bully pulpit to pressure energy companies that are posting record profits, said Jacobs, the historian.
“Many publicly traded companies, including the 100 largest companies, have seen their earnings increase dramatically since the onset of COVID,” she said. “If he wanted to, he could call them directly and say, ‘We’re in the throes of a crisis here – now is not the time to raise prices. “”
Whether that would do much to reduce gas prices is less clear. But politically, the president has little to lose.
“There’s a long history of Americans unhappy with inflation and presidents calling on corporate America to reap what historically presidents called ‘excess profits’. These are always very effective times for presidents,” Jacobs said.
Ban oil exports
Some have urged Mr Biden to ban US oil exports, which could leave more oil for domestic consumption – a move the administration seemed receptive to last year.
But while it may work in the short term, it could also prompt other countries to restrict their own oil exports, according to IHS Markit. This would reduce global supply and drive up gas prices.
The price of oil – by far the most important factor in the cost of gas – is determined globally, and not just by the amount of crude the United States produces. Additionally, the type of oil the United States exports is different from what U.S. refineries are set up to process, so adding supplies destined for foreign markets to the domestic stockpile is problematic.
As a result, the temporary blockage of US oil exports would tighten the global market, while US refineries would have to scramble to reorganize their operations to process a different grade of crude, according to IHS Markit.
Tap the nation’s oil piggy bank
Freeing up more oil from the United States price of gasoline, if only temporarily. Mr Biden ordered a release from the SPR coordinated with other oil-consuming countries, and White House officials have suggests to the possibility of other versions, saying that “all options remain on the table”.– which serves as the country’s emergency oil reserve – could reduce the
In the short term, opening up our oil reserves would only lower gas prices slightly. For gas to be significantly cheaper in the long term, analysts say, the world will have to drill more oil — or depend on it less.