Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
The Biden Administration has spent the last week floating a number of proposed solutions to rising energy costs, which along with inflation are at the top of the list of concerns for most Americans right now. A slew of proposals has been floated without any one of them yet showing consensus to move forward.
While each proposal offers to help ease the short-term pressure on the economy, they all appear to lack the obvious long-term solution, which is to encourage more energy production here in the United States.
Federal Gas Tax Suspension Unlikely to Provide Long-Term Relief for US Consumers
Most recently, the President and members of his Administration have begun discussing a pause on the $18.3 cent per gallon federal gas tax. Given that the U.S. average prices are currently just under $5, this suspension would only represent 1/27th of the cost of a gallon of gas — giving consumers very little real relief if enacted. In addition, the difference in savings from this suspension could soon be wiped out by rising costs and inflation. The fact that it would require Congressional approval, as it would affect U.S. government revenue, is an added complication and has yet to receive much traction on the Hill.
Prospects of this proposal’s viability remain murky. This proposal would certainly lead to an immediate decrease in funding for transportation projects which are desperately needed as the gas tax directly funds these projects.
Gas Cards Still in the Mix
Another idea that has been floating around both on the Hill and from the Administration is the issuance of debit cards to all Americans each month that can be used to purchase fuel. While this proposal initially seemed to lose traction due to workability issues, the President did mention it this week, so it appears to still be in the mix.
When asked about the proposal, President Biden said he was weighing the idea, adding: “That’s part of what we’re considering, that’s part of the whole operation,” he said. This proposal would certainly encourage inflation and creates a host of practical limitations on enactment. It would also not affect the cost of products that are tied to fuel costs (which is nearly everything), so consumers would still be hit by rising costs on products they buy even if they received some relief from their monthly gasoline bill.
Exclusions for Tariffs on the Table
Another proposal that appears to be gaining traction on the Hill and within the Administration is a suspension (either temporary or full) of some China 301 tariffs. Supporters argue that this move could lower the cost on consumer goods and help ease supply chain issues and inflation. Many oilfield products are currently subject to China 301 tariffs and have led to increased costs and supply chain issues in our sector. Should the President choose to move forward with this option, we can expect some energy related products to be on the list of suspended or cancelled tariffs. Energy Workforce recently joined with 177 other trade associations urging the administration to restart an exclusion process for the tariffs, which would exclude tariffs for products where other supply chain locations cannot be found outside of China.
What Should the Administration Consider?
Aside from the tariff suspension, it appears unlikely that any of these options could actually lower the cost to produce energy and encourage the increase of energy production in the United States. Nor would they have a long-term effect on the actual prices at the pump. Energy Workforce continues to work with the Administration pushing long-term solutions that could increase the amount of energy produced in the United States. Fully restarting the federal leasing program both onshore and offshore, streamlining permitting for energy infrastructure projects, and ceasing efforts to increase fees and taxes on U.S. energy production would all be positive steps the Administration could take to encourage significant increases in U.S. energy production.
If you would like to get involved with Energy Workforce advocacy efforts or the Government Affairs Committee, contact SVP Government Affairs Tim Tarpley.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.