This includes suspending federal gas taxes and further tapping the nation’s Strategic Petroleum Reserve.
“This is a kind of a five alarm fire at the White House — the are extremely intensely worried,” Jeff Stein, Washington Post political reporter, said to CBS News.
“High gas prices are one the most important political issues. It is something that people see every day. They feel it in their pockets. It can have a significant impact on a president’s approval ratings,” Stein stated.
This week’s national average gas price was $4.24 per gallon. That is 10 cents lower than recent record highs, but still $1.35 more than last year. According to a Gallup poll , inflation is the most pressing problem facing America at the moment. This week’s Gallup poll shows that this percentage is close to 40 percent.
People notice food and energy the most. Paul Ashworth, Chief North America economist at Capital Economics, stated that you fill up every week.
Stein stated that the White House is looking at several options to rein in gas prices. These include reopening of the Strategic Petroleum Reserve and suspending the federal gasoline tax. Stein also suggested that incentives for oil producers should be offered to increase their output.
Janet Yellen, Treasury Secretary, has indicated that she is open for the Federal Gas Tax to be suspended on Fuel. Democrats in the Senate have introduced legislation that would suspend the 18.5-cents-per-gallon tax for the rest of the year, although critics note that doing so would deplete the Highway Trust Fund, which pays for road maintenance. Many states have eliminated their state gas taxes.
Some lawmakers may not be supportive of energy companies getting tax breaks. Senator Bernie Sanders from Vermont wants to tax excess profits made by oil and gas producers. These companies are reaping huge profits as energy prices rise. In a tweet, Senator Bernie Sanders noted that sales at four of the biggest fossil-fuel extractors have increased by 50% over last year. He called for a tax on excess profits.
The price of gasoline is usually closely linked to the price of crude oil. Stein stated that while crude oil prices fell to below $100 a barrel this week, there has not been a corresponding drop in gas prices.
Despite a high crude oil price, oil companies have been slow to drill for more oil . Many are focusing on paying down their debt and passing their profits on to investors. A recent survey found that nearly three in 10 oil and natural gas executives said that the rise in crude oil prices did not affect their plans for expansion. When asked why they didn’t drill more, oil executives blamed Wall Street. Nearly 60% of them cited “investor pressure to preserve capital discipline”.
The Strategic Petroleum Reserve can also be tapped, but that too has its limitations. This would likely reduce gas prices for a few more weeks, just as it did in November when President Biden opened the SPR. To lower long-term prices, however, policymakers will have to increase oil supply or decrease dependence.
