This post appears here courtesy of the John Locke Foundation
. The author of this post is Brittany Raymer
Americans are paying historically high prices at the pump, in addition to skyrocketing inflation on food, housing and energy. President Joe Biden, feeling the pressure from the public, has asked congress to support a gas tax holiday for the summer that will ease prices by at least 18 cents for gas and 24 cents for diesel.
The question is, will that be enough for families, or will this tax holiday just contribute to more inflation?
In an interview to Newsweek, economics professor David Fiorenza explained that the decreasing prices may alleviate some immediate concerns and provide more discretionary money for "food, vacations, day trips, entertainment"
and even allow some to save or pay down debt. However, this minimal decrease at the pump will likely result in higher inflation on other products that are already surging.
Flooding the market with cash via the various COVID bailouts undertaken by both the Biden and Donald Trump administrations hugely contributed to the skyrocketing inflation. All the gas tax holiday would do is pump more funds artificially into the economy and exacerbate the situation.
"This is what happened with stimulus money,"
Fiorenza said. "It is a result of both [the Biden and Trump] administration's pouring money into consumers' pockets."
Senior Contributor to Forbes Howard Gleckman agrees, recently writing a piece entitled "A Federal Gas Tax Holiday is a Terrible Idea."
Gleckman argues, "Suspending the gas tax is a terrible idea that, on the margin, will make inflation worse, not better."
The gains for briefly alleviating the gas tax only amounts to 3% of the cost of a gallon, only saving families less than $10 a month. If the cost of everything else increases, those modest gains will be completely wiped out.
Even former President Barack Obama considered the idea of a gas tax holiday a "gimmick"
meant to "get (politicians) through an election."
"We're arguing over a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something,"
Obama said in 2018.
At this point, the administration seems incredibly hesitant to consider any solution put forth by the oil and gas industry itself.
Mike Sommers, the President and CEO of the American Petroleum Institute (API), gave the administration a blueprint for how to bring down prices and address energy stability going forward. He also chastised it for villainizing the oil and gas industry.
"Your administration has restricted oil and natural gas development, canceled energy infrastructure projects, imposed regulatory uncertainty, and proposed new tax increases on American oil and gas producers competing globally,"
Sommers said in a letter. "Respectfully, the American people need a different direction to solve this crisis."
When it comes to gas in North Carolina, the prices are already beginning to slip just a smidge, though remain at a staggeringly high $4.59 a gallon. This decrease is mostly due to people adjusting their daily habits and trying to avoid any more trips to the gas station than absolutely necessary.