As travelers prepare to hit the road for summer vacations, gasoline prices are still sky-high and President Joe Biden is proposing a temporary pause on federal gas taxes.

Economists are mixed on whether a gas tax holiday would really do much for the average American. But one thing is for sure — consumers who have no choice but to drive are feeling the pain.

Owners of the best-selling U.S. vehicle, the Ford-150 pickup, are currently paying $157 more per month to fuel up at today's $5 per gallon, compared with 2021, when prices averaged $2.20 per gallon, according to a new report by the Federal Reserve Bank of Dallas.

"If prices climb higher, expect consumers to respond by cutting back on fuel consumption and overall spending sooner than later,” said Garrett Golding, senior business economist at the Dallas Fed.

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Meanwhile, higher diesel prices are weighing heavily on agriculture production and, in turn, raising prices at the grocery store, the Dallas Fed said.

A farmer would pay $27,500 today to harvest 1,000 acres of corn at 5 gallons of diesel per acre, compared with $16,400 in 2021, the report said.

The price hikes come as summer travel is already in full swing. AAA Texas predicts 3.5 million Texans will travel 50 miles or more from home over the holiday weekend. That would be a 3% increase over 2021.

“Summer travel is in high gear with more Texans than ever expected to travel by car this Independence Day,” said Kent Livesay, vice president of AAA Texas. “Travel demand has been on the rise since the beginning of this year and is not letting up. Texans are ready for a break and despite things costing more, they are still ready to take that much needed vacation.”

Biden is proposing a suspension of the 18.4 cents per gallon tax, which has been in existence for 29 years and contributes to the Highway Trust Fund.

"Pausing the federal tax would likely provide some modest relief in gasoline prices to the extent that the savings are passed along," said Ray Perryman, an economist based in Waco. "It would also reduce funds available for infrastructure construction, although there are ways to offset that within the federal budget."

Overall, demand for gasoline has declined from the same period last year as a result of the rising prices, although the summer is likely to see relatively high demand as people take advantage of being able to travel more freely, Perryman said.

"There are factors on both the supply side and the demand side that will begin to put downward pressure on the price of gasoline, but the summer months will likely see high costs remain in effect," he said.

Under the White House proposal, the average driver of a large SUV — one of the most popular vehicle types in the country — would save about $4.60 a week, according to calculations by GasBuddy, which tracks fuel prices nationwide.

That would amount to about $239 a year, although it's unlikely the gas tax suspension would last that long.

In Texas, the average gas price is currently $4.60 for a gallon of unleaded fuel, according to the AAA Texas. That price is actually 9 cents per gallon less than last week, but is $1.86 more per gallon compared with the same week last year.

Of the major metropolitan areas surveyed in Texas, drivers in the Dallas-Fort Worth area are paying the most on average at $4.89 per gallon while drivers in Brownsville are paying the least at $4.30 per gallon.

The national average price for a gallon of regular unleaded is $4.94, which is 7 cents less than last week but remains $1.87 more than the price per gallon at this time last year.

Higher gas prices are due to continued strong demand along with persistent concern over tighter global crude oil supplies with the ongoing war in Ukraine, with the world cutting off Russian oil, AAA Texas said.

Market analysts are watching to see how pressure from rising inflation and record fuel prices will affect demand in the coming weeks, noting it is possible that the recent interest rate increase by the Federal Reserve could slow demand and in turn cause gas prices to drop.

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A gas tax holiday?

Biden last week called on Congress to suspend federal gasoline and diesel taxes for three months. The president will also call on states to suspend their own gas taxes or provide similar relief, the White House said.

At issue is the 18.4 cents-a-gallon federal tax on gasoline and the 24.4 cents-a-gallon federal tax on diesel fuel. If the gas savings were fully passed along to consumers, people would save roughly 3.6% at the pump when prices are averaging about $5 a gallon nationwide.

It’s unclear what action Congress might take, as both Democrats and Republicans have expressed reservations. A number of economists also view the idea of a gas tax holiday with skepticism.

Mark Zandi, chief economist at Moody’s Analytics, estimated that the majority of the 8.6% inflation seen over the past 12 months in the U.S. comes from higher commodity prices due to Russia’s invasion of Ukraine, as well as continued disruptions from the coronavirus.

“In the immediate near term, it is critical to stem the increase in oil prices,” Zandi said, suggesting that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help to boost supplies and lower prices.

Republican lawmakers have said Biden has created a hostile environment for domestic oil producers, causing their output to stay below pre-pandemic levels.

Senate Republican leader Mitch McConnell called the gas tax holiday an “ineffective stunt” in a Wednesday floor speech. “This ineffective administration’s big new idea is a silly proposal that senior members of their own party have already shot down well in advance,” he said.

The Associated Press contributed to this report.

This article originally appeared on Austin American-Statesman: Gas still high in Austin as consumers get ready for summer travel