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How federal gas tax holiday could impact Texans

Posted at 10:01 PM, Jun 24, 2022
and last updated 2022-06-25 00:10:13-04

BRYAN, Texas — President Joe Biden called on congress this week to suspend federal gas taxes in an effort to help Americans. We learned if the federal gas tax holiday were approved in Texas, how it would impact Texans.

According to AAA, today’s average for Texas gas is $4.58 a gallon, and right now in Bryan, it’s $4.65 a gallon.

Daniel Armbruster with AAA Texas says governments use fuel tax revenues to build and maintain transportation infrastructures and without a federal gas tax we could face another problem.

“Could gas tax holidays create a funding gap for localities that desperately need that funding for construction and repairs, and we have many of those across Texas,” said Daniel Armbruster, Spokesperson, AAA Texas. “Roadways and bridges that are crumbling that need updates.”

Armbruster says as the cost of crude oil continues to rise, we will continue to see elevated gas prices.

He says if you break down the cost of a gallon, about 50 percent is the cost of crude oil and one fifth is taxes.

“Here in Texas, we pay about 38 cents when you combine the federal tax which is 18 cents and the state tax which is 20 cents,” said Armbruster. “So you’d still be paying the state tax even if the federal tax went away.”

Dr. Dennis Jansen teaches economics at Texas A&M and says we could face losing billions for infrastructure repairs by having a gas tax holiday.

“The federal gas tax raises about 38 billion dollars, 37 to 38 billion dollars a year for the highway trust fund and if we have a three-month gas holiday, that’s a fourth of a year so that’s basically between 9 and 10 billion dollars lost for the highway trust fund,” said Dr. Dennis Jansen, Economics Professor, Texas A&M.

Dr. Jansen says either way, those funds will have to be paid, even if it means substituting other revenue.

Ed Hirs is a University of Houston energy fellow and says we need to be prepared for higher gas prices.

“I think we all need to be prepared financially and perhaps emotionally for higher fuel prices for the duration of the war,” said Ed Hirs, Energy Fellow, University of Houston.

“We’ve been exporting gasoline and diesel and crude oil to Europe. We can’t continue to do it at the pace we’ve been doing it.”

Hirs says we the price of crude oil is about 108 dollars a barrel, doubling last year’s price.

Dr. Jansen says during the start of the pandemic, we were producing 13 million barrels a day and since people were not leaving home often, there was nowhere to store the oil.

Now with people returning to work, production has increased, but not enough.

“The increased consumption of gasoline is leading to an increase in production, but production hasn’t increased as fast as consumption and there’s this huge demand and it’s being dealt with in the marketplace as always by a rise in price,” said Dr. Jansen.

Dr. Jansen says suspending the federal gas tax will save consumers about four percent.

If federal gas taxes were suspended for three months, you would save a little under three dollars each time you filled up at the pump.