What can politicians do to lower U.S. gas prices?

With the Americans in front of him higher gas costs in eight yearselected leaders are understandably eager to lower prices at the pump.

States from Connecticut to Georgia are lowering gasoline taxes, while some Democrats in Congress have advocated lowering the federal gasoline tax. Meanwhile, the White House has in recent weeks raised the idea of ​​taking advantage of the U.S. emergency oil reserves.

It’s no mystery why: Research shows that public disapproval of incumbent presidents tends to increase along with the cost of filling. For those in charge, then, at least it seems like they are doing something, anything, about the gas price spiral is paramount.

“The White House person is responsible for what we’re seeing at the bomb, in the public’s imagination, no doubt,” said historian Meg Jacobs, author of “Panic at the Pump: The Energy.” Crisis and the Transformation of American Politics in the 1970s. ” “That was true in the 70’s. That’s still true today.”

Beyond the political perspective, however, is there anything that can really be done to reduce gas prices? Here are the suggested options.

Suspend the gasoline rate

Two Democratic senators have introduced legislation to suspend the federal gas tax for the rest of the year. At 18.4 cents a gallon, lowering the tax could provide significant relief for consumers. A typical SUV driver would save almost $ 3 every time he fills his tank.

At the state level, Connecticut, Georgia and Maryland they have suspended gasoline taxes for periods ranging from one to 14 months. The Florida legislature has proposed a month-long gasoline holiday vacation that would go into effect in October. Other states, such as California and Illinois, have suggested freezing gasoline taxes to their current levels instead of allowing automatic tax increases to be initiated.

“I think it will be a trend that will become more common in the United States in 2022, especially with the deadlines set to be presented later this year,” said Troy Vincent, a senior analyst at commodities research firm DTN. , on CBS MoneyWatch. “There will be more political sensitivity in the price of oil and … entering the election season, that will be a problem.”

The amount that a tax break could save consumers varies by state, with gas rates ranging from a minimum of 15 cents a gallon in Alaska to 67 cents in California, according to the Tax Foundation.

California Gov. Gavin Newsom has proposed bonus for car owners – a move that does not directly reduce the price of gasoline, but eliminates part of the needle of high prices.

Bet on oil producers

Late last year, President Biden asked Federal Trade Commission to examine whether oil companies were illegally keeping gasoline prices high, noting that producer costs at the time were falling even as gas prices were rising.

Analysts were skeptical about whether Mr Biden’s specific argument had merit, although they noted that the oil industry has a history of monopolistic actions. However, the president could still use his bully pulpit to put pressure on energy companies that are making record profits, said Jacobs, the historian.

“Many listed companies, including the top 100 companies, have seen a dramatic increase in their profits since the inception of COVID,” he said. “If I wanted to, I could call them directly and say, ‘We’re in a crisis here, now is not the time to raise prices.’

It is less clear if this would do much to reduce gas prices. But politically, the president has little to lose.

“There’s a long history of Americans being upset about inflation, and presidents have called on U.S. corporations to get what presidents have historically called ‘excess profit.’ for presidents, “Jacobs said.

Prohibit oil exports

Some have urged Mr Biden to ban U.S. oil exports, which could leave more oil for domestic consumption, a move the administration seemed receptive to last year.

But while this may work in the short term, it could also push other nations to curb their own oil exports, according to IHS Markit. This would reduce global supplies and increase gas prices.

The price of oil, by far the most important factor in the cost of gas, is determined globally, and not just by the amount of crude oil produced by the United States. In addition, the type of oil that the U.S. exports is different from what U.S. refineries are set up to process, so it is problematic to add supplies destined for foreign markets to domestic stock.

As a result, temporarily blocking U.S. oil exports would harden the world market, while U.S. refineries would have to struggle to readjust their operations to handle a different grade of crude, according to IHS Markit.

Touch the country’s oil piggy bank

Release of more US oil Strategic oil reserve —Which serves as the country’s emergency oil reserve — could reduce the price of gasoline, even if only temporarily. Mr Biden ordered the release of the SPR late last yearcoordinated with other oil-consuming nations, and White House officials have done so he insinuated faced with the possibility of more releases, saying that “all options remain on the table.”

In the short term, opening up our oil reserves would only slightly lower gas prices. For gas to be substantially cheaper in the long run, analysts say the world will have to drill more oil or depend less on it.

In:
• gas prices