Story Highlights
- National average gas price stands at $4.50 per gallon, up more than 20 cents since the end of April
- The federal gas tax is 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel
- The tax funds more than $23 billion annually for federal highway and public transit programs
What Happened
President Donald Trump endorsed suspension of the federal gasoline tax in an interview with CBS News Monday, marking a reversal for the White House as Republicans face political blowback over high gasoline prices. Last week the White House told Axios that a suspension was not “currently under consideration.” Trump told CBS: “We’re going to take off the gas tax for a period of time, and when gas goes down, we’ll let it phase back in.”
On Monday, Trump also said in Oval Office remarks that he would “reduce” the tax. The taxes and other fees on retail gasoline and diesel fuel are 18.4 cents per gallon for gas and 24.4 cents per gallon for diesel, according to the U.S. Energy Information Administration. Reducing or pausing the federal gas tax would require congressional approval, but several Republican lawmakers immediately advanced proposals to do just that on the heels of Trump’s remarks.
Eight in ten Americans say gas prices are straining their budgets, including overwhelming majorities of Democrats, independents, and Republicans alike, according to the latest NPR/PBS News/Marist poll. In addition, 63 percent of Americans say they blame Trump “a great deal” or “a good amount” for those higher gas prices, including more than six in ten independents and nearly one-third of Republicans.
The proposal reflects the political urgency the White House now feels on energy prices. Trump told reporters in the Oval Office on Monday that the suspension would last “till it’s appropriate,” without committing to a specific end date. The bipartisan dimensions of the issue are notable: Democratic Senators Mark Kelly of Arizona and Richard Blumenthal of Connecticut have sponsored a bill to suspend the tax until October 1, and Democratic Rep. Chris Pappas of New Hampshire has a companion measure.
Why It Matters
The gas tax debate touches on several competing pressures simultaneously: consumer relief, infrastructure funding, political accountability, and the limits of executive power. Trump’s decision to publicly endorse the suspension is a tacit acknowledgment that the Iran war’s energy consequences have become one of the most politically damaging aspects of the conflict for his administration.
The federal gas tax provides more than $23 billion per year in revenue for federal highway and public transit programs. The president cannot suspend the federal tax on his own. This means any relief will require bipartisan or at minimum full-caucus Republican agreement in both chambers — not a certainty given the fiscal concerns some lawmakers have about depleting the Highway Trust Fund.
Gas prices are up 50 percent since the Iran war began. That surge has rippled through the broader economy, raising transportation costs for goods, inflating airline ticket prices, and hitting low- and middle-income households particularly hard given that they spend a proportionally higher share of their income on transportation.
Economists and policy experts have raised questions about how much actual relief consumers would see even if the suspension passed. Retailers and other players in the supply chain typically do not pass along all of those savings to consumers. If the federal levy is suspended, gas prices will fall an average of 13.2 cents a gallon and the cost of diesel will decline by 14.6 cents a gallon, according to a Penn Wharton analysis. A household filling a 15-gallon tank once a week between June 1 and October 1 would save a total of about $35.
Economic and Global Context
The fundamental cause of elevated gas prices — the partial closure of the Strait of Hormuz — cannot be addressed by a domestic tax policy. As long as tanker traffic through the strait remains disrupted, global oil supplies are constrained and prices remain elevated regardless of what Washington does on the tax side. The main issue is that oil tankers still cannot pass safely through the Strait of Hormuz despite a ceasefire, which Trump said Monday was “on massive life support.”
Gas prices are displayed above $6 per gallon at stations in parts of California, and the national average reached $4.50 as of May 12. Typically, retail gasoline prices rise in the spring and peak during late summer as demand soars, according to the U.S. Energy Information Administration. That seasonal dynamic means prices could climb further in the months ahead, compounding political pressure on the White House regardless of whether Congress acts on the gas tax.
“This is a problem without an easy, short-run solution,” said Adam Hoffer, director of excise tax policy for the Tax Foundation. “Suspending the federal gas tax would in fact reduce the price of gas by 18 cents per gallon. As the President indicated, this would be a temporary measure.” Several states, including Georgia, Indiana, Kentucky, and Utah, have already moved to provide state-level gas tax relief, compounding pressure on federal lawmakers to act as well.
Implications
The gas tax debate will test Republican unity on fiscal policy at precisely the moment the party faces a challenging midterm environment. Some conservative lawmakers have historically opposed gas tax holidays as economically inefficient and damaging to infrastructure investment — but those arguments are harder to sustain when constituents are paying $4.50 or more per gallon at the pump heading into summer driving season.
Suspending the federal gas tax may only provide modest relief at the pump while creating longer-term fiscal challenges, some policy experts say. “A gas tax suspension would undoubtedly help consumers in the short term by immediately lowering prices at the pump,” said Certified Financial Planner Stephen Kates, a financial analyst at Bankrate. But the longer-term costs to highway maintenance and transit infrastructure are real and would need to be offset from other revenue sources.
For the administration, the political calculus is clear: doing something visible about gas prices before the summer peak matters more than the precise economic efficiency of the tool chosen. Whether Congress moves quickly enough to make a difference before summer demand pushes prices even higher remains uncertain.
Trump’s China trip adds another dimension. The central topic during his Xi summit was the Strait of Hormuz, and any progress toward reopening it would do far more to reduce gas prices than any domestic tax change. The two policy tracks — a gas tax suspension at home and diplomacy in Beijing — reflect the dual nature of the energy crisis: one part domestic politics, one part geopolitical emergency.
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