Democrats’ Gas Tax Holiday Proposal Contradicts Biden’s Energy Policies

by | Feb 18, 2022 | Energy

The hypocrisy of that move is almost laughable given that it is President Biden’s energy policies that are causing the high gasoline prices

Wyoming Governor Mark Gordon: “Mr. Biden, tear up your energy policy. Let Wyoming power our country.”

The White House and top Democratic lawmakers are considering a federal gasoline tax holiday, potentially pausing fees at the pump to help combat rising gasoline prices. The hypocrisy of that move is almost laughable given that it is President Biden’s energy policies that are causing the high gasoline prices. It is Biden on his first day in office canceling the Keystone XL Pipeline. It is Biden who put a moratorium on oil and gas leasing on Federal lands. It is the Biden administration that canceled leasing in the Arctic National Wildlife Refuge. Biden’s message to the oil industry in the United States is clear: we do not want your industry to grow here, but keep gasoline prices low so we can win the next election and continue to destroy your industry. President Biden is waging war on American energy producers.

The Proposed Bill

A group of Senate Democrats introduced a bill that would suspend the gasoline tax of 18.4 cents per gallon for the rest of the year—an election year. Asked about the proposal, the White House signaled that “all options are on the table” as the administration tries to ease the gasoline price as it has always been a factor in Americans’ choice at the polls.

Gasoline prices have spiked in recent months, with average prices recently topping $3.52 per gallon, about $1 more than at the same time last year. Biden’s oil and gas policies have kept oil supply low in a market of rising demand, which has increased oil prices, and his inability to contain the geopolitical tensions between Russia and Ukraine have continued the oil price rise. Rising gasoline prices are in addition to rising housing costs and higher prices at the grocery store. Prices overall climbed 7.5 percent in January, compared with the same month in 2021, as inflation continued at its most rapid clip in about four decades. Higher energy prices drive prices of everything higher, as transportation costs escalate.

Other attempts by the White House to curb the rise in gasoline prices have failed. In November, President Biden opted to release 50 million barrels of oil from the country’s Strategic Petroleum Reserve. In August, the Biden administration called on the Organization of the Petroleum Exporting Countries (OPEC) to increase oil production to help increase global supply after OPEC had implemented production cuts during the COVID-19 pandemic. This proposed bill to temporarily end the gasoline tax could also backfire by ultimately serving to benefit the producers of gasoline more than consumers. Clearly, the policy would be difficult to end as gasoline prices will spike with its reestablishment, especially since Biden’s moratorium on leasing restricts future energy supplies.

In the meantime, the U.S. Transportation Department will be short of funding and requiring rescue from taxpayers in a time when roads and bridges are in need of repair. Sen. Joe Manchin III told reporters he was not comfortable with the fact that a gas tax holiday could leave federal highway funds in worse shape. Democratic lawmakers have proposed shifting other federal money into the federal highway fund, which is normally financed through the per-gallon federal fees. The trust fund, which brought in over $39.5 billion in 2019, suffers from an annual shortfall as the transportation department has grown and as some consumers have shifted to electric vehicles that are not subject to the same fees.

Wyoming Governor Gordon’s ‘State of the State’ Message

“Stopping the exploration and production of federal oil, gas and coal means that our state bears a disproportionate burden of reduced royalties, reduced severance taxes and reduced economic benefit,” Gordon said. “And for what?”

“These actions won’t reduce global warming or benefit consumers. Instead, they have caused inflation to soar. As a matter of fact, during 2021, while the Biden administration was limiting oil production in Wyoming, it increased Russian oil imports and called for more production from OPEC.” Biden begged OPEC for more oil after federal oil and gas lease sales that had originally been slated to take place in spring and summer 2021 in Wyoming and elsewhere were deferred due to an executive order from Biden that implemented the pause on the sales.

“Mr. Biden, tear up your energy policy,” Gordon said. Gordon called for an energy policy that makes room for fossil fuels and new sources of energy, arguing that Wyoming is well poised to help execute an all-the-above energy strategy. “Let Wyoming power our country,” the governor said. “Give us the tools and that chance to make the nation energy independent again. Wyoming has it all: best wind, solar, gas, coal, nuclear and the ability to store over 50 years of our nation’s carbon emissions.” “Innovation, not regulation is our way forward to give our nation the energy it requires and simultaneously solve the world’s climate concerns. We don’t need to choose between fossil fuels or new types of energy.”

A lease sale in Wyoming was slated for the first quarter of 2022 after a federal judge in Louisiana blocked the Biden administration’s pause on federal oil and gas leases. And a lease sale did take place in the offshore Gulf of Mexico on November 17 for $192 million—the largest oil and gas lease sale in the nation’s history. However, another judge decided to invalidate that lease sale on grounds that the government had failed to take climate change into consideration. Judge Rudolph Contreras of the United States District Court for the District of Columbia ruled that the Biden administration had acted “arbitrarily and capriciously” when it conducted an auction of more than 80 million acres in the Gulf of Mexico because the Interior Department failed to fully analyze the climate effects of the oil and gas consumption that would result from the lease sale. As such, it is not clear whether Wyoming’s lease sale will fare any better. In the meantime, not one legal lease has been issued since President Biden’s inauguration on January 20, 2021.

Conclusion

In an election year, Democrats are grasping at straws to lower gasoline prices that are continuing to increase. Their latest proposal is to place a temporary moratorium on federal gasoline taxes for this year. That means taxpayers will be subsidizing the transportation department even more than the current shortfall that has occurred annually as it has grown and as consumers buy electric cars and are not contributing to the highway trust fund. As Wyoming Governor Gordon indicates, the solution is clear. Biden just needs to tear up his anti-oil and gas energy policies and let the market work. Innovation, not regulation, is what the United States needs.

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The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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