By AAMER MADHANI and JOSH BOAK – Associated Press
REHOBOTH BEACH, Del. (AP) – President Joe Biden said Monday he would decide by the end of the week whether he would support a federal gasoline tax exemption, which would save U.S. consumers up to 18.4 cents per gallon.
“Yeah, I’m thinking about it,” Biden told reporters after strolling along the beach near his vacation home in Delaware. “I hope to have a decision based on the data – I’m looking by the end of the week.”
The administration is increasingly looking for ways to spare the public from rising prices at the pump, which began to climb last year and surged after Russia invaded Ukraine in February. Nationwide gas prices average just under $5 a gallon, according to AAA.
Biden said members of his team were scheduled to meet with the CEOs of major oil companies this week to discuss the price hike. Biden lashed out at oil companies, saying they were making excessive profits as people felt the squeeze from soaring costs at the pump and inflation. But Biden said he would not meet with oil executives himself.
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“I want an explanation for why they’re not refining more oil,” Biden said.
The Biden administration has already released oil from the U.S. strategic reserve and increased ethanol blending for the summer, in addition to sending a letter last week to oil refiners urging them to increase refining capacity. Yet those efforts have yet to significantly reduce pricing pressures, so the administration is now considering a gasoline tax exemption. Gasoline and diesel fuel taxes help pay for highways.
Penn Wharton’s budget model on Wednesday released estimates showing consumers saved at the pump due to gasoline tax holidays in Connecticut, Georgia and Maryland. The majority of savings went to consumers, rather than gas stations and others in the energy sector.
Energy Secretary Jennifer Granholm in a Sunday interview on CNN’s “State of the Union” warned that “part of the challenge with the gas tax, of course, is that it finances the roads”.
But Treasury Secretary Janet Yellen noted on Monday that “consumers are really hurting as gasoline prices rise” and remained open to a gasoline tax exemption.
“It’s been a huge burden on American households and I think while it’s not perfect, it’s something that should be looked at as a policy to address it,” Yellen said in Toronto during of a joint press conference on Monday with the Canadian Deputy Prime Minister and Chrystia Freeland, Minister of Finance.
A gas tax exemption would likely face a tough climb for congressional approval. Democrats hold a narrow majority, and Democratic House Speaker Nancy Pelosi and Senate Minority Leader Mitch McConnell have expressed skepticism in the past about such a move.
A White House official, insisting on anonymity to discuss options on gas prices, said conversations were ongoing and Biden wanted to explore all avenues to lower prices.
Oil refiners say their ability to produce additional gas and diesel is limited, meaning prices could stay high unless demand starts to decline.
The American Petroleum Institute and American fuel and petrochemical manufacturers sent a joint letter to Biden on Wednesday that refineries are already operating near maximum capacity and that nearly half of the capacity taken off the line was due to converting facilities to produce renewable fuels.
“Today’s situation did not materialize overnight and will not be resolved quickly,” the letter said. “To protect and foster America’s energy security and refining capacity, we urge you to take steps to encourage greater domestic energy production,” including new infrastructure and reduced regulatory burdens.
Strolling the beach with his daughter Ashley, granddaughter Naomi and his granddaughter’s fiancé, Biden frequently stopped to chat with sunbathers spending the June 19 federal vacation at the beach.
He took a moment to offer reassurances on inflation — the consumer price index hit a nearly 40-year high of 8.6% in May from the same month a year ago — and growing warnings from economists that a recession could be imminent.
“We’ll get through this, guys,” Biden told a group of beachgoers.
Last week, the Federal Reserve intensified its efforts to control inflation by raising its key interest rate by three-quarters of a point – its largest increase in nearly three decades – and announced further rate increases to come.
Former Treasury Secretary Larry Summers told NBC’s “Meet the Press” on Sunday that, in his view, “the prevailing probability would be that by the end of next year we would see a recession in the economy American”.
Biden said he spoke with Summers, who served as Treasury secretary in the Clinton administration, on Monday morning.
“There is nothing inevitable about a recession,” Biden said.
Boak reported from Baltimore. AP writer Rob Gillies contributed from Toronto.
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