Commodities
Market Chatter: Trump Administration Seeks Extended Gas Tax Holiday With Phased-in Return
The Trump administration is working with Congress to suspend federal excise taxes on gasoline and diesel, as the conflict in Iran drives up oil and fuel costs across the US, Bloomberg reported on Tuesday, citing a senior administration official.Talks are currently underway to draft legislation that provides consumer relief without provoking a run on fuel supplies or triggering other unintended economic consequences.One concern among officials is that an abrupt end to the tax holiday could prompt a panic-buying rush by consumers looking to lock in lower prices, the report said.To mitigate the risk, administration officials are considering language that would gradually restore the taxes, potentially over more than a year, to avoid sparking severe supply shortages.President Donald Trump has called for suspending the tax "until it's appropriate", as US lawmakers have advanced various legislative proposals to lift the 18.4-cent-per-gallon levy on gasoline and the 24.4-cent-per-gallon charge on diesel.Senator Josh Hawley, a Missouri Republican, has offered a plan that limits the tax relief to 90 days, while granting the president authority to extend the holiday.The White House did not respond immediately to' request for comments.Separately, Representative Jeff Van Drew, a New Jersey Republican, is advancing a measure to halt the fees for 18 months, followed by a gradual phase-in period.Meanwhile, Representative Brendan Boyle, a Pennsylvania Democrat, has proposed legislation to phase out the federal gasoline tax whenever the national average price exceeds $4 a gallon, with the level of relief pegged directly to pump costs.The legislative push comes as retail fuel prices surge following the closure of the Strait of Hormuz amid the ongoing Middle East conflict.On Monday, the nationwide average for unleaded gasoline stood at $4.53 per gallon, a 52% increase since the start of the conflict, the report said, citing AAA data. Diesel prices have climbed 50% over the same period to a nationwide average of $5.65 per gallon.US Interior Secretary Doug Burgum defended the initiative, arguing the cumulative savings would offer meaningful relief to American households."In aggregate, if you take a look at the millions of gallons of gasoline that are consumed every day by Americans, even 18 cents a gallon adds up pretty quickly, in terms of keeping money back in their pockets," Burgum was quoted as saying.However, energy and economic experts have warned that a gas tax holiday could backfire. Critics argue the measure could incentivize motorists to increase fuel consumption, working against efforts to maximize physical supplies.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)
