[Comprehensive] Biden Cornered by Inflation Brings Up 'Fuel Tax Exemption' Criticized by Obama

[Image source=EPA Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] U.S. President Joe Biden, who has been under fire for soaring inflation, urged Congress on the 22nd (local time) to pass legislation exempting the federal fuel tax for the next three months. This is a card that former President Barack Obama had strongly criticized as a "showy political gimmick," but this time it was Biden, who was Obama's running mate, who brought it up.

According to the Washington Post (WP) and others, President Biden announced in a national address at the White House that afternoon, "By suspending the 18-cent federal fuel tax for the next 90 days, we can lower gasoline prices and provide some relief to families." He added, "I know that exempting the fuel tax alone will not solve the (inflation) problem," but said, "It won't alleviate all the pain (for households), but it will be a big help."

Currently, the federal fuel tax on gasoline is 18.3 cents per gallon. For diesel fuel, 24.4 cents per gallon is imposed. The White House expects that exempting the fuel tax will result in about a 3.6% price reduction. Congressional approval and other procedures are essential for the fuel tax exemption to take effect.

Additionally, President Biden urged each state to temporarily exempt state fuel taxes, which are higher than the federal fuel tax rates. He also demanded that the refining industry increase refinery operations to expand the supply of petroleum products.

This is a response measure amid growing accountability claims against President Biden due to the worst inflation in 41 years ahead of the November midterm elections. The White House expects that reflecting the fuel tax exemption could lower gasoline prices in the U.S. by up to $1 per gallon.

U.S. gasoline prices have surged from the $3 range per gallon just a year ago to around $5 recently. According to the American Automobile Association (AAA), as of this day, the national average gasoline price in the U.S. was $4.955 per gallon. In California, it was $6.371 per gallon.

President Biden again blamed Russian President Vladimir Putin for the sharp rise in gasoline prices. He said, "Republican lawmakers are blaming me for the oil price issue," and questioned, "Are you saying that supporting Ukraine is wrong? Is it better to lower oil prices while Putin is wielding an iron fist?"

Despite a slight recent drop in oil prices, gasoline prices have not fallen, and he also directed criticism at oil companies. He said, "Now is the time of war," and "Lower the prices," urging companies to join in stabilizing prices. Oil companies are scheduled to meet with Energy Secretary Jennifer Granholm on the 23rd. President Biden also sent a message pressuring both Congress and the industry, saying, "I hope Congress, state governments, and companies will do their part."

However, in Congress, not only opposition Republican lawmakers but also some Democrats have shown negative or reserved stances regarding the fuel tax exemption. There are doubts about whether the fuel tax exemption will actually benefit Americans. Within the Republican Party, there are even criticisms that President Biden, whose approval ratings have plummeted since inflation soared, is engaging in political gimmicks.

In particular, the fuel tax exemption was a card that the then-Democratic presidential candidate Obama criticized in 2008, when international oil prices soared, as "a mere showy political gimmick by politicians." Biden was Obama's vice-presidential running mate at the time. Earlier, Biden's release of the largest-ever strategic petroleum reserve in March this year has not shown significant effects so far, and many analyses suggest that even if the fuel tax exemption is implemented, it will not have an effect worth expecting.

Jason Furman, a Harvard University economics professor who served as chairman of the Council of Economic Advisers under the Obama administration, pointed out, "Consumers will only see about one-third of the benefit from the federal fuel tax cut," adding, "Most of the tax reduction will go into the pockets of companies."

Meanwhile, the August West Texas Intermediate (WTI) crude oil price on the New York Mercantile Exchange closed at $106.19 per barrel, down $3.33 (3.04%) from the previous session. This closing price is the lowest since May 12.

This content was produced with the assistance of AI translation services.