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A federal gas tax holiday is ‘certainly worth considering’ to lower gas prices, Treasury Sec. Janet Yellen told ABC’s ‘This Week’ on Sunday morning.
Average gas prices breached $5 per gallon last week for the first time ever last and have dipped slightly to $4.98 as of Sunday.
Asked by host George Stephanopoulos whether a gas tax holiday was a potential short-term solution, Yellen replied: ‘President Biden wants to do anything he possibly can to help consumers. Gas prices have risen a great deal and it’s clearly burdening households.’
‘He stands ready to work with Congress and that’s an idea that certainly worth considering,’ she added.
Yellen again said that inflation, with prices up 8.6 percent this May over last, is ‘unacceptably high’ but said that she did not believe a recession was ‘inevitable.’
A federal gas tax holiday is ‘certainly worth considering’ to lower gas prices, Treasury Sec. Janet Yellen told ABC’s ‘This Week’ on Sunday morning.
Three quarters of CEOs across the globe are expecting a global recession within the next 12 to 18 months due to Russia’s brutal war in Ukraine, a Conference Board survey warned last week.
Federal Chair Jerome Powell has warned the American economy will see even more damage before inflation comes down from its 41-year-high.
The Federal Reserve on Wednesday raised interest rates by 0.75 per cent – their biggest increase since 1994 – in an attempt to rein in inflation. Powell had warned last month that more hikes are likely in the near future.
‘Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data,’ he said.
‘We think that the public generally sees us as as very likely to be successful in getting inflation down to 2 percent. and that’s critical,’ he noted. ‘It will take some time to get inflation back down but we will do that.’
Gas prices in Harlem, New York were $5.19 a gallon last week
Biden has come under increasing pressure even among his own party to suspend the federal gas tax, 18.3 cents a gallon, as a way to drive down prices.
But Democratic Rep. Earl Blumenauer wrote a letter to President Biden this week warning him against taking such a step, according to The Hill.
The Oregon lawmaker said that doing so would create a ‘massive gap’ in the infrastructure and transportation budget. Suspending the federal gas tax through the rest of the fiscal year would leave the Highway Transportation fund $20 billion short, according to budget modeling from the University of Pennsylvania’s Wharton School of Business.
Energy Sec. Jennifer Granholm expressed hesitancy about suspending the gas tax on CNN Sunday. ‘Part of the challenge with the gas tax, of course, is that it funds the roads. And we just did a big infrastructure bill to help fund the roads.’
Some states, including Maryland, Georgia and New York, have already moved to suspend their gas tax. Some suggest that Biden calling on the other states to do the same would also be an effective move from the White House to help ease pressure on Americans’ pocketbooks.
Biden’s economic team has discussed a gas tax holiday and is expected to meet for more talks on the matter later this week.
Biden has already tapped the Strategic Petroleum Reserves, which had a negligible effect on gas prices. Last week, he wrote a later to the CEOS of the nation’s major fuel companies threatening to use his ’emergency power’ if they do not take action to lower prices.
In a letter to Exxon obtained by Axios, Biden wrote that the difference ‘of more than 15% at the pump is the result of the historically high profit margins for refining oil into gasoline, diesel and other refined products.’
‘Since the beginning of the year, refiners’ margins for refining gasoline and diesel have tripled, and are currently at their highest levels ever recorded,’ he added in the letter to Exxon Mobil CEO Darren Woods.
‘Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied,’ he wrote. ‘Already, I have invoked emergency powers to execute the largest Strategic Petroleum Reserve release in history, expand access to E15 (gasoline with 15% ethanol), and authorize the use of the Defense Production Act to provide reliable inputs into energy production.’
‘I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply,’ he added.
While the White House has repeatedly said it is open to ideas on how to relieve rising tax prices, Biden’s Commerce Secretary Gina Raimondo had a more defeatist attitude last week when she said there was not much the administration could do to help.
‘Unfortunately, that is the brutal reality,’ Raimondo told CNN when asked what Biden can do.
‘This is, in large part, caused by Putin’s aggression,’ Raimondo added. ‘You know, since Putin moved troops to the border of Ukraine, gas prices have gone up over $1.40 a gallon, and the President is asking for Congress and others for potential ideas.’
‘But as you say, the reality is that there isn’t very much more to be done,’ she said.
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