High gas prices prompt calls for tax breaks, stimulus checks

“The 360” shows you diverse perspectives on the day’s top stories and debates.

What’s happening

Gas prices have soared since the beginning of Russia’s invasion of Ukraine, adding extra pressure to consumers already dealing with higher costs at the pump after a year of rapid inflation.

In response, the Biden administration has been aggressively exploring ways to make up for the loss of Russian oil imports, which the U.S. banned last week. Most experts, though, say there’s little the president can do to substantially reduce gas prices in the short term. Despite Republican calls to ramp up drilling in the U.S., economists say the limitations on domestic production are mostly market-driven, and that it would take months for new wells to start producing enough oil to affect supply levels. At the same time, green energy solutions championed by many Democrats are generally seen as a long-term means of decreasing dependence on oil rather than a viable substitute in the immediate future.

With limited options for addressing the underlying supply issues, lawmakers have proposed a variety of potential ways to help Americans bear the burden of rising fuel costs. Maryland’s governor and state Legislature have agreed to a temporary suspension of state gas taxes, an idea that has been pitched in several other states and at the federal level. California Gov. Gavin Newsom recently floated the idea of a tax rebate “to put money back in the pockets” of people struggling to afford high fuel costs. Some progressive Democrats have proposed creating a new system of regular stimulus checks funded by a steep tax on oil company profits.

Why there’s debate

Each of these proposals, to varying degrees, has supporters and detractors. There’s general agreement, though, that any of them would mostly help along the margins but that real relief for consumers won’t come until gas prices drop.

The logic behind a gas tax holiday is simple: If you don’t tack extra taxes on top of the underlying costs, gas will be cheaper. The federal gas tax is about 18 cents per gallon, and state taxes range from 17 cents to 51 cents per gallon. But skeptics say it’s not certain that those savings would be passed onto consumers, rather than to the oil industry and gas stations. There are also concerns that a tax holiday would sap funding from critical government programs, like highway renewal projects.

Proponents of a direct stimulus, either through rebates or checks funded by taxing oil company profits, say this option is the best way to ensure that money goes straight to the people hardest hit by rising gas prices. Skeptics argue that any plan that disincentivizes investment in oil production will only make the supply shortage last longer.

Some environmentalists reject all these ideas because, they argue, each of them represents a step back from the ultimate goal of ending reliance on fossil fuels. Many say the best way to help Americans endure high gas prices is to do everything possible to limit how much people need to drive cars in the first place.

What’s next

With so much uncertainty surrounding the oil supply chain, experts are wary of making predictions about how high gas prices will rise and when they might begin to drop off. Most expect a spike in fuel costs heading into the summer months, but many factors — including the possibility of peace in Ukraine or another major wave of COVID-19 — could bring them back down.


A gas tax holiday may be the only realistic option to lower prices right away

“If the fossil fuel companies could somehow get Putin to end his war in Ukraine, bringing about an end to sanctions against Russia, which would free that country’s ability to sell crude oil, then by all means, Big Oil needs to get moving, stat. But they don’t have that ability, and gas prices are determined by the global cost of crude oil. What is doable? Suspending the gas tax.” — Editorial, Boston Herald

Funds from gas taxes are too important to the nation’s long-term goals

“The federal gas tax is a critical, though increasingly weak, policy that Congress should bolster, not undermine. … Suspending the gas tax would be another step toward breaking the linkage between how much people use the roads and what they pay to maintain them. One side effect would be more driving — and more wear and tear on the nation’s infrastructure. Another would be more greenhouse gases in the atmosphere.” — Editorial, Washington Post

Curbing corporate greed will help keep prices from rising unnecessarily

“Why are gas prices up? Oil compan[ies] are engaged in an orgy of profiteering. Wh[ile] working-class Americans struggle to pay at the pump, Big Oil revenues surge.” — The Nation, John Nichols

Taxing profits would only make price spikes even more severe

“Gas prices are already outrageously high. … Imposing new taxes on oil companies increases their costs — and as ECON 101 teaches us, that’s a textbook recipe for a decrease in supply. When supply decreases, prices go up even further!” — Brad Polumbo, Washington Examiner

Tax rebates could help Americans shoulder rising costs for everything, not just gas

“A tax rebate is a good idea, but must be applied broadly so that it helps all Californians who are struggling. Call it the gas and groceries rebate, and everyone should be able to get behind it.” — Editorial, Los Angeles Times

Keep it simple, and just send people money

“Families need help now. The fastest and most effective way to protect vulnerable citizens from the impacts of global economic instability is to provide a direct payment through the IRS, similar to the three stimulus checks that were sent to families during the height of the pandemic. … But unlike the stimulus checks, these payments should be targeted directly to low- and moderate-income families.” — Mark Wolfe, CNN

High gas prices are good, actually

“Higher prices at the pump encourage people to drive less and buy more electric and fuel-efficient cars. Discouraging consumption of fossil fuels and reducing greenhouse gas emissions should remain one of the state’s highest priorities. The price we pay for the impact of climate change … is much higher than the increased costs at service stations.” — Editorial, San Jose Mercury News

Lawmakers shouldn’t ignore the demand side of the equation

“Demand needs to come down. Now. … There are simple measures to take: Reduce speed limits on highways; ask consumers to turn down their thermostats a touch; encourage the use of public transportation by reducing the cost of tickets, or letting people ride on weekends for free.” — Javier Blas, Bloomberg

Democrats shouldn’t force through bad policies because of political pressure

“Therapists advise against making major decisions when you’re highly emotional. Democrats should heed that advice and stop proposing rash ways to lower gasoline prices.” — Rick Newman, Yahoo Finance

The sad truth is there are no quick fixes

“Democrats scrambling for a quick fix — like a proposed gas tax holiday — will find that they’re also out of luck. The biggest issue isn’t the domestic supply of oil or the taxes being paid. It’s how much Americans love and expect cheap gas, a problem the U.S. has only encouraged as an automobile-centric society.” — Hayes Brown, MSNBC

The government should do everything it can to get people to ditch their cars

“Here’s something he could do: Pay people to get rid of their cars. … A federal buyback program for gas-guzzlers would be just one piece of the urgent, necessary work of decentering automobiles from American life — a just transition away from our cars — but it’s a surprisingly achievable one.” — Alissa Walker, Curbed

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Photo illustration: Yahoo News; photos: David Crane/MediaNews Group/Los Angeles Daily News via Getty Images