Gas prices at record levels as millions prepare for July 4 travel; Biden talks tax holiday

Despite record-breaking high gas prices, nearly 48 million Americans will hit the road next week for Independence Day weekend.

According to AAA, the weekend of June 30 to July 4 will see an increase of 3.7% more travelers than in 2021 and almost at pre-pandemic levels.

And gas prices are only going up.

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Pennsylvania's average gas price is still above $5 per gallon of unleaded, according to AAA. The national average is just below that.

In June 2021, the average price of gas in Pennsylvania was $3.248. As of last week, the state average was $5.029. The Western Pennsylvania average is just above $5 this week.

"The national average for a gallon of gas fell below $5 this week," AAA said in a news release. "The primary cause is the tumbling cost of oil, which fell from $122 to around $110 per barrel due to fears of a global recession and its associated economic slowdown.

"As a result, the national average for a gallon of gas is $4.96, a nickel less than a week ago, 37 cents more than a month ago, and $1.89 more than a year ago."

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"As crude oil prices remain volatile, the price per gallon for gasoline will likely remain elevated," AAA said.

Most gas prices around Somerset County hovered just below $5. As of Wednesday, the price at Sheetz, Kwik Fill, Mostoller's and Sunoco were all $4.99.

Although Pennsylvania has the highest gas tax in the country, the price just across the border into Maryland was only 10 cents cheaper — $4.89 at Sunoco and Pilot near Grantsville.

Will there be a gas tax holiday?

On Wednesday, President Joe Biden asked Congress to suspend the federal gas tax for the next three months.

The president also called on states and local governments to temporarily suspend their gas taxes.

A three-month federal gas tax holiday would suspend a tax of 18.4 cents per gallon of gas and 24.4 cents for diesel. The administration is billing the gas tax holiday as a way to provide some "breathing room" as it works to bring costs down over the long term. The pause, which the White House envisions lasting through September, would require congressional approval.

Revenue from the federal gas tax funds the Highway Trust Fund, which is used to pay for transportation and mass transit projects. Biden wants Congress to offset the loss of highway funds — estimated to be about $10 billion — with other federal tax revenue. With the federal government's deficit down $1.6 trillion this year, the U.S. can afford to pause the gas tax, an administration official said.

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Biden's push comes as he's struggled to rein in historic gas prices amid skyrocketing inflation that has taken a toll on his presidency ahead of the November midterm elections. Suspending the gas tax is one of the quickest steps he can take to try to ease the pain for drivers. The national average for a gallon of gas was $4.968 on Wednesday, according to AAA, jumping more than $1.50 since Russia's February invasion of Ukraine.

And yet a federal gas tax holiday, floated over the years but never enacted, has plenty of critics. Larry Summers, former Treasury secretary in the Clinton administration and an economic advisor for President Barack Obama, this week called it "a gimmick" that doesn't solve the underlying issues causing the price spike.

Some economists warn it could drive up inflation once the holiday ends, deplete transportation funds and only reduce a fraction of the overall historic spike in gas prices. Environmentalists have argued a gas tax holiday undermines the goal of moving toward clean energy.

There's also no guarantee Biden's gas tax holiday proposal will pass Congress, where Democrats would need 60 votes in the evenly divided Senate to overcome any filibuster from Republicans.

A coalition of Senate Democrats from battleground states — including Raphael Warnock, D-Ga., Mark Kelly, D-Ariz., and Maggie Hassan, D-N.H. — in February proposed suspending the gas tax through the end of the year. But the legislation faced resistance from Republicans who slammed it as a political stunt to help Democrats in the midterms. The White House never rallied behind the legislation, which did not advance, but remained open to it publicly.

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One common concern raised by critics of a federal gas tax holiday is that oil companies will pocket the tax cut. But new research suggests that might not be the case.

The Wharton School of the University of Pennsylvania released budget estimates last week showing the majority of cost savings during gas tax holidays that Maryland, Connecticut and Georgia enacted this year went to consumers instead of gas companies or filling stations.

In Maryland, 72% of all tax savings passed to consumers, the study found. In Georgia, it was between 58% and 65%, and in Connecticut between 71% and 87%.

The Biden administration projects consumers could save $1 per gallon if retailers and oil companies take action and state gas taxes and the federal gas tax are suspended.

Editor's note: Joey Garrison, USA Today, contributed to this report.

This article originally appeared on The Daily American: Somerset County, PA gas prices near $5 per gallon