Donald Trump said he is considering suspending the federal petrol tax as the White House races to tackle a fuel price crisis ahead of November’s midterm elections. Asked on Tuesday if pausing the 18.4 cent per gallon duty was on the table, the president said: “We’re thinking about that.” Any such move would require congressional approval. With four weeks to go until midterm elections that will decide control of Congress, surging fuel prices have heaped pressure on the president and his Republican Party and eroded voter support.
Trump, fearing a backlash at the polls, has held crisis meetings with aides to assess ways to douse the surge, including a potential ban on diesel exports. The president’s latest remarks come after he eased restrictions on dyed diesel — usually reserved for off-road use — allowing it to be used on public roads, with its 24.4 cent per gallon tax deferred for the rest of the year. While a number of states have paused duties on petrol, the federal tax on the fuel has not been suspended since the Highway Trust Fund was established in 1956, with revenues used to fund roads.
Former president Joe Biden asked Congress to suspend the duty for three months in 2022 as prices soared in the wake of Russia’s invasion of Ukraine, but a suspension was never enacted. Trump previously voiced support for a so-called petrol tax holiday in May as prices surged following the outbreak of the Iran conflict, saying the levy could be scrapped “for a period of time.” A number of bills to implement a suspension have been proposed this year, but none have been brought to a vote. US petrol prices averaged $4.37 a gallon on Tuesday, according to the AAA motoring club, up almost half since the US and Israel first bombed Iran in February, but still shy of the record $5.02 per gallon it hit after Russia’s full-scale invasion of Ukraine in 2022.
Diesel, meanwhile, hit a fresh record of $6.53 per gallon last month. It has since receded slightly but remained historically elevated at $6.32 per gallon on Tuesday. On Friday, Trump backed off a threat to ban diesel exports that would have caused huge global fallout after European allies agreed to release more stocks of refined products as part of a G7-wide effort to tamp down prices.
The oil industry has also encouraged the White House to lean on China to run its refineries harder and ship more fuel to global markets.
Source: Financial Times Markets · Summarized by HeadlinesBriefing