The proverbial rock and a hard place.
That’s where the Biden administration finds itself this election season as inflation continues to grow at an alarming rate and gas prices are double what they were a year ago.
So, what does the president do when gas prices get high? He tries new gimmicks. The first one was tapping the federal Strategic Petroleum Reserve. Through that action, back in April, he started releasing 1 million barrels of oil a day.
Have gas prices dropped? Not really. They’ve gone up and they’ve gone down; but it’s hard to say that tapping the oil reserve has resulted in lower prices.
Now, he wants to propose a federal gas tax holiday that would suspend the federal tax on gas for a few months. Right now, the federal government charges an 18-cent tax per gallon of gasoline and a 24-cent tax per gallon of diesel.
Such a move has consequences. The federal gas tax is turned around to build infrastructure and maintain highways, bridges in the federal highway system. Not having those funds would have a dramatic impact on infrastructure projects, even in the short term.
Additionally, the hope from the Fed in raising interest rates it will slow spending, but not enough to cause a recession, but enough to ease inflation. A gas tax holiday could encourage more spending and would do little to curb inflation.
The gas tax holiday is not really supported by either Democrats or Republicans. Economists believe demand must wane in order for supply to catch up. It’s that simple, but it’s not something that will happen overnight.
Two things make sense in all this. We are still feeling the impacts of two years of pandemic issues that have disrupted manufacturing, transportation and other forms of commerce that have now ramped back up, pushing supplies to the brink.
And second, we continue to yo-yo our overall energy policy. We must formulate a reasonable and responsible overall energy policy that includes encouraging domestic production of oil and gas resources and diminishes punitive regulations on the oil and gas industry. It’s a policy that needs to be long-standing and sustaining, not at the whims of each new president or majority in Congress.