President Joe Biden warned on Tuesday that Americans could see even higher gas station prices if Russia invades Ukraine.
“I will not pretend that it will be painless. This could affect our energy prices,” he said in his speech at the White House.
“If Russia decides to invade, this will also have consequences here at home, as the American people understand that protecting democracy and freedom is never free,” he said.
White House press secretary Jen Psaki said the president’s words should serve as a warning that the invasion could lead to higher gas prices, which have already reached record levels across the country.
“I think the president mentioned the fact that if Russia decides to invade, it could have consequences here at home. And that could affect energy prices, which could affect gas station prices,” she said at a daily press briefing.
President Joe Biden has warned that Americans could see even higher gas station prices if Russia invades Ukraine.
Gasoline prices in the US rose this week to their highest level in eight years.
White House press secretary Jen Psaki said the president’s remarks should serve as a warning that the invasion could lead to higher gas prices.
Biden warned that a Russian invasion “remains entirely possible” and said the United States could not confirm Russian President Vladimir Putin’s claim that he had begun withdrawing troops from the border with Ukraine.
Russia is a major exporter of gas, and there are fears that US economic sanctions, which Biden promised to impose in the event of Putin’s invasion, will increase the price of a gas station.
Gasoline prices in the US rose this week to their highest level in eight years amid fears of a possible invasion of Ukraine. The average price of a gallon of gasoline hit $3.49 on Wednesday, up four cents from the previous week and about a dollar more than a year ago, according to AAA data.
This is the highest price since October 2014, according to the Department of Energy.
Psaki said the administration is working to alleviate any financial hardship Americans may face. Biden and Democratic lawmakers are weighing a federal gas tax exemption as prices reach record levels and the party faces an uphill battle in the November midterms.
“At this point, I have nothing to predict to you, but all options remain on the table,” Psaki said when asked about the gas tax holiday.
The two most vulnerable Democratic senators in 2022 — Mark Kelly of Arizona and Maggie Hassan of New Hampshire — have proposed a bill that would suspend the federal gas tax until January 1, 2023.
The federal tax on gasoline is 18.4 cents per gallon for standard gasoline and 24.4 cents per gallon for diesel.
The federal gas tax, established in 1932, funds the Highway Trust Fund, which in turn funds federal transportation costs.
Tanks leave a Russian base near the border with Ukraine, which they claim is part of the withdrawal, but President Biden said the US could not confirm the withdrawal.
However, the Committee on a Responsible Federal Budget estimates that the tax holiday “would cut gas tax revenue by about $20 billion and could worsen inflation after the holiday expires.”
The Highway Trust faces an annual funding shortfall, in part because the gasoline tax hasn’t changed since 1993 and more people are driving hybrids or electric vehicles that aren’t taxed on gasoline.
The watchdog group found that this year “more than $42 billion in revenue is expected to go to the Highway Trust, more than three-fifths of which will come from the federal gas tax.” The federal gas tax holiday, which runs from March to December, will reduce trust fund revenue by $20 billion, cutting the highway trust fund revenue stream by nearly half this year.”
Larry Summers, a former Treasury secretary who has been critical of the Biden administration’s handling of inflation, told The Washington Post that the gas tax holiday is “short-sighted, inefficient, stupid and useless.”
“This is a terrible policy at a time when we have called climate change an existential threat,” he told the paper.
At least four other Democratic senators—Debbie Stabenow of Michigan, Katherine Cortez Masto and Jackie Rosen of Nevada, and Raphael Warnock of Georgia—signed as co-sponsors.
This fall, Cortes Masto and Warnock are also in a tough fight for re-election. Democrats are fighting to maintain control of the House of Representatives and the Senate. Republicans have made inflation and the high cost of living a major part of their 2022 messaging strategy.
In his statement announcing the bill, Kelly pointed to Americans’ high prices from the gas station to the grocery store.
“This bill will lower gas prices by suspending the federal gas tax until the end of the year to help Arizona families struggling with the high costs of everything from gas to groceries,” the statement said.
Hasan also pointed out the high prices.
“We need to keep thinking creatively about how we can find new ways to reduce costs,” she said in a statement.
The two most vulnerable Democratic senators in 2022 — Mark Kelly of Arizona (left) and Maggie Hassan of New Hampshire (right) — have proposed a bill that would suspend the federal gas tax until January 1, 2023.
The offer comes at a time when Americans are expressing their dissatisfaction with the state of the economy, record inflation and stagnation due to the coronavirus pandemic.
Inflation reached 7.5% in January, the highest level in 40 years.
Gallup’s annual Mood of the Nation poll found just 33% satisfied with the economy – a 10-point drop from last year and a whopping 35 points over the past two years. And only 27% are satisfied with the country’s energy policy – a low figure, which is explained by high gas prices.
The Biden administration released 50 million barrels of oil from the Strategic Petroleum Reserve in November to help fight high gas prices ahead of the holidays.
But prices remain high, and this trend could continue due to cold weather and the Russian threat to Ukraine.
Oil prices rose to more than $90 a barrel, the highest level since 2014.
“Recent cold weather in the US has boosted demand for heating oil,” the AAA writes in its analysis of gas prices. “Meanwhile, fears that Russia will react to potential Western sanctions by keeping crude oil in an already tight global market is putting strong upward pressure on prices.”