High Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds | Latest News!

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What’s going on?

Since the start of Russia’s invasion of Ukraine, gas prices have skyrocketed, putting even more pressure on customers who are already grappling with rising gas prices at the pump following a year of rapid inflation.

As a result, the Biden administration is working hard to find ways to compensate for the loss of Russian oil shipments, which the US imposed last week. Most experts, though, believe there is nothing the president can do in the immediate term to significantly lower gas prices.

Despite Republican promises to increase drilling in the United States, analysts believe domestic production constraints are primarily market-driven, and that new wells would take months to start producing enough oil to alter supply levels. Green energy alternatives championed by many Democrats, on the other hand, are often viewed as a long-term means of reducing reliance on oil rather than a feasible substitute shortly.

With few alternatives for resolving the underlying supply issues, lawmakers have proposed several possible solutions to assist Americans to cope with rising fuel prices. The governor of Maryland and the state legislature have agreed to a temporary suspension of state gas taxes, a concept that has been floated in several other states and at the federal level. Gov. Gavin Newsom of California recently proposed a tax rebate “to put money back in the pockets” of individuals who are struggling to pay rising fuel prices. A new system of regular stimulus checks supported by a hefty tax on oil industry profits has been proposed by some progressive Democrats.

Why is there a disagreement?

Each of these suggestions has advocates and opponents in varying degrees. However, there is widespread agreement that while any of these will help on the edges, meaningful relief for consumers will not arrive until gas prices fall.

Stimulus UpdateHigh Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds (1)
High Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds | Latest News!

The idea behind a gas tax holiday is simple: Gas will be cheaper if no additional taxes are added on top of the fundamental prices. State gas taxes range from 17 cents to 51 cents per gallon, and the federal gas tax is roughly 18 cents per gallon. However, skeptics argue that the savings will likely be passed on to customers rather than the oil business and petrol stations. There are also concerns that a tax holiday would deplete money for important government programs such as highway renewal.

Proponents of a direct stimulus, such as refunds or checks paid by a tax on oil company profits, argue that this is the most effective approach to ensure that money reaches the people who are most affected by rising gas costs. Skeptics contend that any proposal that discourages oil production investment would merely prolong the supply shortfall.

Some environmentalists oppose all of these concepts, claiming that each one marks a step back from the ultimate objective of ending fossil fuel dependence. Many individuals believe that the best approach to assist Americans cope with high gas prices is to do everything necessary to reduce the amount of time they need to drive in the first place.

What comes next?

With so much uncertainty surrounding the oil supply chain, experts are hesitant to estimate how high gas prices will rise and when they will start to fall. Fuel prices are expected to rise as summer approaches, but various events, like the potential of peace in Ukraine or another significant wave of COVID-19, might push them back down.

Perspectives

A gas tax vacation may be the only viable alternative for immediately lowering costs.

“If the fossil fuel giants can persuade Putin to cease his conflict in Ukraine, so ending sanctions against Russia and restoring Russia’s ability to sell crude oil, then Big Oil needs to get moving immediately.” However, they lack this capability, and gas prices are set by the worldwide price of crude oil. What can be done? “The gas tax will be suspended.” — Boston Herald editorial

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Gas tax revenue is far too vital to the country’s long-term interests.

“Congress should strengthen, not weaken, the federal gas tax, which is an essential but increasingly weak policy.” … Suspending the gas tax would be another step toward dismantling the link between how much people use roads and how much they pay to keep them in good repair. Additional driving would be one of the adverse effects, causing more wear and tear on the nation’s infrastructure. Another option is to increase the number of greenhouse gases in the atmosphere.” — Washington Post editorial

Stopping corporate greed from driving up prices needlessly can help limit prices from growing unnecessarily.

“What is causing the increase in petrol prices?” Oil companies are benefiting on a grand scale. While working-class Americans struggle to make ends meet at the gas pump, Big Oil profits soar.” — John Nichols, The Nation

Stimulus Update High Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds (2)
High Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds | Latest News!

Profits would be taxed, making price rises even worse.

“Gas costs are already exorbitant….” Imposing extra taxes on oil corporations raises their expenses, which is a textbook recipe for a decline in supply, as ECON 101 teaches us. When supply falls, prices rise even higher!” — Washington Examiner’s Brad Polumbo

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Tax rebates might help Americans cope with growing expenses in a variety of areas, not simply petrol.

“A tax rebate is a fantastic idea, but it must be administered broadly to benefit all Californians in need.” It’s called the gas and grocery refund, and it’s something that everyone can get behind.” — Los Angeles Times editorial

Keep it easy and send money to folks.

“At this time, families require assistance. The quickest and most efficient approach to safeguard vulnerable citizens from the effects of global economic instability is to send them a direct payment through the IRS, similar to the three stimulus cheques that were issued to families during the peak of the pandemic… These payments, unlike the stimulus checks, should go directly to low- and moderate-income households.” CNN’s Mark Wolfe

High gas costs are beneficial.

“Rising gas prices encourage individuals to travel less and purchase more electric and fuel-efficient vehicles. One of the state’s top priorities should be to discourage the use of fossil fuels and reduce greenhouse gas emissions. We pay a significantly bigger premium for the effects of climate change than we do for increased service station charges.” — San Jose Mercury News editorial

The demand side of the issue should not be overlooked by legislators.

“Demand must be reduced. Now… Reduce highway speed restrictions; ask customers to dial down their thermostats a few degrees; encourage the use of public transit by lowering ticket prices or allowing people to travel for free on weekends.” — Bloomberg’s Javier Blas

Stimulus UpdateHigh Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds (3)
High Gas Prices Have Prompted Calls for Tax Relief and Stimulus Funds | Latest News!

Because of political pressure, Democrats should not push through terrible policy.

“Psychologists advise against making important judgments when you’re emotionally charged. Democrats should take that advice to heart and refrain from suggesting hasty ways to cut fuel prices.” — Yahoo Finance’s Rick Newman

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Unfortunately, there are no easy cures.

“Democrats looking for a quick remedy, such as a proposed gas tax holiday, will likewise be out of luck.” The most serious problem isn’t a lack of domestic energy supplies or unpaid taxes. It’s how much Americans crave and demand cheap petrol, an issue that the United States has only exacerbated as a car-obsessed nation.” – MSNBC’s Hayes Brown

The government should do everything possible to encourage people to abandon their automobiles.

“Here’s an idea for him: pay folks to get rid of their cars….” A federal repurchase scheme for gas-guzzlers is just one part of the urgent, required process of decentering autos from American life — a just transition away from our cars — but it’s surprisingly possible.” — Curbed’s Alissa Walker

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