US President Joe Biden has said that he is considering providing a gas tax holiday as it will help citizens save money on fuel. Even though former president Barack Obama called it a "gimmick", Biden is considering pausing the collection of federal gas tax and will conclude by the end of this week.

Back in April 2008, Obama said in North Carolina that even if he managed to give a tax holiday for gas, that would barely make citizens save half a tank of gas. That would lead them to save 5% on the gas tax. However, this did not guarantee whether fuel companies would pass on the savings or hike prices by 5%. In the latter case, citizens would pay more to the suppliers.

In the current scenario, ever since Russia invaded Ukraine, gas prices have been increasing continuously. Currently, the average cost of gas is $4.98 per gallon. This was the highest price in many years, the second-highest being $4.114 per gallon in July 2008. Pausing the federal gas tax at this moment would help an American save 18.4 cents per gallon.


While Biden has accused oil refiners of the rise in gasoline prices, the refiners have said their capacity to produce more fuel is limited. Furthermore, the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers have jointly written to Biden that half of the refineries' ability took off to produce renewable energy. They have requested better infrastructure to increase domestic production of fuel.

Treasury Secretary Janet Yellen feels that providing a tax holiday will reduce the financial burden of every American citizen due to the rising prices of gas. The Penn Wharton Budget Model has also revealed that gas tax holidays provided in Georgia, Maryland, and Connecticut have helped consumers save money on gas. However, the energy sector has not received any benefit from it.

Meanwhile, Energy Secretary Jennifer Granholm finds the decision rather challenging as the funds received from the federal gas tax go into building & maintaining roads. Others sceptical about this decision include House Speaker Nancy Pelosi and Senate minority leader Mitch McConnell.

Biden has decided to meet CEOs of most fuel companies this week with his team to discuss the matter in detail before concluding.