President Joe Biden says he will propose a gas tax holiday to lower gas prices across the country. But will that plan work?
According to LSU energy studies professor Greg Upton, it probably won't.
"Even if that entire gas tax were to go away, we likely would not see the price for consumers reduced by that full 18 cents per gallon," Upton says.
He adds that the tax holiday could hurt consumers in the long term. For one, it would impact the federal Highway Trust Fund and lead to more deficit spending. In addition, Upton says the tax holiday could ultimately lead to even higher gas prices.
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"If you were to remove that gasoline tax and therefore consumers did respond a little bit by consuming more gasoline, that could put further upward pressure on the price," Upton said.
There is some good news for consumers. Oil and gas prices could fall later this year and into next year.
"Come the fall and the spring, we'll likely see a reduction in prices," Upton said, citing the prices of oil on the futures markets. "This time next year, we can probably anticipate prices being somewhere in the range of a dollar a gallon lower than they are today."
As more oil and gas companies expand their refining and drilling operations, consumers could see prices come down from their record high levels. That's because, Upton says, more gasoline on the market would help balance the supply and demand for the commodity, which has been unbalanced since the start of the COVID-19 pandemic.
"What companies did is they stopped drilling for oil and gas wells because the demand simply wasn't there," Upton said. "But now as demand is coming back, production has started to come back online, but there's a little bit of lag in the time that it takes to get those operations going again, drill new wells, et cetera.
"What we expect now is that refining profits are up--likely a lot of because demand is coming back and prices are high--and that'll put incentive for those individual refineries to increase the amount of capacity that they are able to produce."
Still, Upton warns consumers not to get their hopes up too quickly.
"Prices will likely stay at the $4.00-$4.50 range throughout the summer," Upton said.