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President Biden has moved forward with a full-throated call to suspend the federal gas tax for three months alongside other new actions to attack one of the biggest drivers of inflation.
During the speech Wednesday at the White House, the president called for a suspension of both federal and state gas taxes through September — which would require new legislation from Congress — as well as new actions by the oil industry to pass along savings to consumers more quickly and also quickly increase refining capacity,
The suite of actions taken together has the potential to reduce the cost of a gallon of gas by around $1, Biden aides say, but each measure could face an uphill battle from lawmakers on Capitol Hill to executives at the top gas companies.
By suspending the federal gas tax "we can bring down the price of gas and bring families just a little bit of relief," Biden said during his speech Wednesday.
The price of gas has risen dramatically in recent months with the most recent data from the American Automobile Association showing prices hovering at around $5 a gallon, up from around $3 just months ago. The increases have been driven by a range of factors, most notably disruptions in the global oil markets following Russia’s invasion of Ukraine.
The measure that Biden is calling for would suspend the federal gas tax for three months and also include offsets to have no negative effect on the Highway Trust Fund, which has been troubled in recent years and is largely funded by gas taxes.
The White House estimates that a three-month suspension of the federal gas tax, which is 18.4 cents per gallon, would cost roughly $10 billion in total.
'Give Americans a little extra breathing room'
The new push will face lawmakers who have been skeptical about the idea in recent months and has been widely criticized from in various corners.
Earlier this year, Democratic lawmakers floated the idea of a gas tax holiday and, back then, Republican Leader Mitch McConnell of Kentucky mocked the plans as a “half-baked proposal” that wouldn’t work.
On the other side of the aisle, House Speaker Nancy Pelosi has also criticized the notion of a federal gas tax holiday, saying that the savings won’t necessarily reach consumers.
Industry experts have also criticized the impact of a suspension. On Tuesday, Lipow Oil Associates President Andrew Lipow told Yahoo Finance Live that a gas tax suspension would result in “a very small impact for the consumer."
If enacted, the move would join other recent actions from the White House aiming to make a dent in gas prices, which has included releasing 1 million barrels per day from the Strategic Petroleum Reserve.
Biden is also asking states to take similar action to suspend their gas taxes — which many have already been mulling. Oil companies will also be in focus, with the president set to pressure oil companies to pass along savings more quickly while also prodding refining companies to increase their output in the months ahead.
During his speech Wednesday, Biden called on the oil companies to pass along "every penny" in savings they receive.
Energy Secretary Jennifer Granholm is set to meet with CEOs of the 7 top oil refiners on Thursday to make the case directly. Biden recently sent a letter to top oil refiners blasting their high profits as "not acceptable."
That meeting, according to a senior administration official, will be “a discussion to see if there are some concrete near-term solutions and ways the federal government can be helpful to bring that additional capacity online as quickly as it possible.”
They added that “we're certainly approaching it in a constructive, actionable, pragmatic way.”
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.