RALEIGH, N.C. (WNCN) – The Biden Administration is considering a federal gas tax holiday. If put into action, it could knock 18 cents off per gallon.
While it may save a few cents on the front end, a petroleum analyst with Gas Buddy, Patrick De Haan, tells CBS 17 it could have a downside.
“It could exacerbate the situation by causing more Americans to hit the road,” De Haan said. “If prices do go down 20 cents per gallon (or so), that could drive more of an imbalance of supply and demand that could eventually drive prices up.”
In addition, road projects that rely on the federal gas tax would lose out on money, too.
“This is a situation that’s been made much worse by Russian’s invasion of Ukraine. We’ve also seen about a million barrels a day of refinery capacity shut down,” De Haan said.
North Carolina is currently averaging $4.61 per gallon. If the tax holiday were in place, drivers would instead pay $4.43.
“Certainly the White House could do more, but with varying success — meaning they could bring prices down here or there — but it’s not going to be the amount of relief most Americans want to see,” De Haan said.
Hitting the $5 per gallon average mark is something that has loomed over the country for weeks.
Reaching that average isn’t an unreasonable expectation. If a hurricane hits this summer and closes down refineries, that could be something that shoots prices up higher, too.
“It remains a possibility, ‘m hopeful that we can avoid it, but we’ll just have to and see,” De Haan said.
In the meantime, North Carolina Democrats in the Senate are pushing for a possible $200 gas reimbursement for people who had a driver’s license as of March 1.
Additionally, neither state Democrats or Republicans are pushing for a state gas suspension.
But, in fiscal year 2020, the state gas tax generated close to $2 billion for the North Carolina Department of Transportation. It’s the largest source of funding for the department.
“Average gas prices in Raleigh are down about five cents a gallon in the last week. Concerns are mounting of an economic slowdown, that could cause demand to decline,” De Haan said. “That could cause prices to go down as well but it’s certainly hard to cheerlead for a slow down in the economy.”