Gas prices continue to skyrocket due to the ongoing U.S. war against Iran, which has interrupted global oil shipments. On Monday, President Donald Trump proposed one way to help drivers paying more at the pump: a holiday from the federal gas tax. In an interview with CBS News, Trump said, “We’re going to take off the gas tax for a period of time, and when gas goes down, we’ll let it phase back in.” He added, “It’s a small percentage, but you know, it’s still money.”
Congressional Approval Needed
There are several major problems with this plan becoming reality. For one, Trump cannot implement a federal gas tax pause on his own. Suspending the tax, which currently stands at 18 cents per gallon for regular gas and 24 cents for diesel, requires congressional approval. So far, Congress has not approved a federal gas tax holiday, although there is bipartisan interest in Trump’s proposal.
Minimal Savings for Drivers
Even if the federal gas tax pause were enacted, drivers should not expect significantly lower gas prices. The potential savings are modest compared to the high prices Americans are experiencing. Xan Fishman, vice president of the energy program at the Bipartisan Policy Center, said the change per gallon would be between 9 and 14 cents. On Tuesday, AAA reported the national average for a gallon of regular gas is $4.50, 50% higher than last year. Fishman noted gas was $3.15 a year ago, so a few cents saved is “not nothing, but it certainly isn’t removing the bulk of the price increase.”
Patrick De Haan, head of petroleum analysis at GasBuddy, described the discount as “a drop of only about 2.9% in the price of gasoline.” He also warned that lower prices could increase demand and exacerbate price increases.
Long-Term Consequences
The federal gas tax is not the only tax drivers face; states also impose their own gas taxes. Some states, including Georgia and Indiana, have temporarily suspended theirs during the U.S. war against Iran. However, a gas tax suspension is not a helpful long-term strategy for safer roads. Revenue from the federal gas tax funds the Highway Trust Fund, which supports local roads and bridges. The Bipartisan Policy Center estimated that a five-month suspension would reduce revenue by approximately $17 billion. Fishman said a monthslong pause would lead to worse roads, causing more “wear and tear on your tires or risk of a flat tire.” Additionally, bumpier roads reduce gas mileage, requiring drivers to buy more fuel.
Ending the War as a Solution
Experts say the most direct way to end soaring gas prices is to end the war against Iran that keeps the Strait of Hormuz closed to oil shipments. “It’s going to continue going up until either global demand comes down to better match the level of supply that we have, or until the strait reopens,” De Haan said. Even then, “It might take the better part of a year for global inventories to catch up to the [months] of oil being blocked by the strait.” However, a U.S.-Iran deal appears unlikely. On Sunday, Trump rejected a U.S. ceasefire proposal as “TOTALLY UNACCEPTABLE!” on his social media.
