Biden's "Gas Tax Holiday" Would Actually Push Pump Prices Higher
While we know that Biden's proposed gas tax holiday is dead on arrival, and thus just another waste of time by the administration whose hot air emissions have singlehandedly raised global temperature by at least one degree, we would be remiss if we didn't point out just how stupid this latest suggestion truly was.
According to JPMorgan analyst, the Biden's admin's intervention to artificially lower gasoline prices would remove some of the incentive to curb consumption and would in fact push pump prices higher as artificially lower prices would encourage people to drive more.
Instead, long-term price relief can only be achieved when insufficient refining capacity and other supply-side issues are addressed or when demand declines significantly (i.e., Biden pushes the US economy into a recession). Indeed, as we discussed last night, proposed solutions under discussion include cutting fuel taxes, changing blending requirements, and capping fuel exports.
Before we get into the details, a quick anecdote on just how much Biden's tax holiday would "save"
The latest measure under consideration is a temporary halt in the federal gas tax—a key source of funding for federal roads and bridges—that could lower prices at the pump by 18.4 cents per gallon (the 18.4 cents per gallon comes from 18.3 cents in excise tax plus 0.1 cent in a storage fee). The national average price for a gallon was $4.955 per gallon on Tuesday, according to AAA. A gas tax holiday would require congressional action, putting the decision in the hands of an equally divided Senate. How much would the tax holiday benefit an average American driver? If the federal gas tax was suspended for the rest of the summer, someone who drives 12,000 miles a year in a car that averages 22.8 miles per gallon would only save about $20.
So yeah, don't spend it all at once.
https://www.zerohedge.com/commodities/bidens-gas-tax-holiday-would-actually-push-pump-prices-higher