4 Ways The White House Wants To Try To Lower Gas Prices – Forbes Advisor

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Gas prices have skyrocketed this spring, with the national average topping $4.30 last month. And while prices have fallen slightly in the last few weeks, experts fear it’s a temporary reprieve.

The Russian invasion of Ukraine has resulted in heavy sanctions on Russia from most western countries, including a complete ban on Russian oil imports in the US This shock to the world’s oil supply—compounded with an already-struggling supply due to Covid—means higher gas prices aren’t going away any time soon.

For consumers, that means continuing to feel the financial burden of filling up at the gas pump. The White House is pledging to help—and has three strategies it’s exploring to help lower prices.

4 Strategies the White House May Use to Lower Gas Prices

1. Authorize E15 Gasoline Sales This Summer

The White House announced on April 12 that the Environmental Protection Agency (EPA) will grant an emergency waiver to allow E15 gas to be sold this summer.

E15—gasoline that includes a 15% ethanol blend—typically can’t be sold between June 1 and September 15 because it contributes to emissions (essentially, smog) more during warmer months.

The White House says that if a consumer purchases E15 gas during the summer, they can save an average of 10 cents per gallon of gas.

But Andrew Gross, spokesperson for AAA, says the move doesn’t make a huge difference for consumers. E15—sometimes marketed as Unleaded 88—is only available at about 2,300 gas stations, a fraction of the estimated 145,000 fueling stations in the US While drivers who already fill up with E15 may continue to use it, “I’m not sure how many people will seek it out,” he says.

E15 fuel can’t be used in cars made prior to 2001, and it can’t be used in motorcycles, lawnmowers or boats, Gross says. And if your car requires premium fuel, you can’t switch to E15—the lower octane level could damage the engine.

Check your vehicle’s owner’s manual to verify whether you can use E15 if available in your area.

2. Implement a Gas Tax Holiday

In February, a group of Senate Democrats introduced a bill last week that would create a federal gas tax “holiday” that would suspend the tax, which is 18.4 cents per gallon, until January 2023. The proposal has not gained much traction since being introduced , largely because the federal gas tax is a key source of funding for federal roads and bridges.

Connecticut, Georgia and Maryland have temporarily suspended their state gas taxes, and several others are considering similar measures.

Read more: Maryland And Other States Are Suspending Their Gas Tax—Is Yours Next?

Tax policy analysts warn that a suspension of the federal gas tax wouldn’t do much to actually help consumers.

“Do the math—it’s about $100 bucks a year in savings, or about 30 cents a day,” said Howard Gleckman, senior fellow at the Tax Policy Center, in an interview with Marketplace. “What’s more likely to happen is that oil companies will simply keep some of the tax cut themselves.”

Alex Muresianu, a federal policy analyst at the Tax Foundation, argues that low gas supply, combined with the eliminated gas tax, could even have the opposite effect on gas prices.

“Reducing taxes on gasoline could spur further increased demand for gas, and in turn, higher prices,” Muresianu writes.

3. Release Oil From the Strategic Reserves

The country created a strategic petroleum reserve (SPR), which consists of storage sites full of barrels of crude oil across the country, in the 1970s to mitigate the effects of oil supply reductions.

On March 1, President Joe Biden authorized 30 million barrels to be released from the reserve, about 6% of the 580 million barrels of crude oil it held as of February 25.

During his State of the Union address, Biden said the release will help “blunt gas prices here at home.” But 30 million is a tiny fraction of what is needed to push gas prices down; In 2021, the United States consumed an average of close to 20 million barrels of petroleum per day. The 30 million barrels released from the reserve amount to a day and a half’s worth of oil consumption.

Releasing oil from the strategic reserves isn’t a new strategy—and historically, it hasn’t done much to lower gas prices over the long term. The gesture is purely symbolic, says David Sacco, a practitioner in residence at the finance program at the University of New Haven, with a hope that it’ll calm oil markets and cause prices to drop.

The last president to tap into the reserves was Bill Clinton; In 2000, he released 30 million barrels of oil from the nation’s strategic reserve, and it only lowered gas prices for two weeks before they spiked again.

“No serious president would ever release enough of the strategic oil reserve to make it have an impact on our non-wartime oil needs,” Secco says. “The amount of oil you’d have to release [for an impact] would decimate the reserve.”

4. Lift Sanctions on Venezuela

After cutting Russia off from exporting oil to the US, the White House considered a controversial strategy to increase oil imports from Venezuela.

The Biden administration discussed lifting sanctions on Venezuela to reopen the oil trade between the two countries, and US officials met with Venezuelan officials in early March.

The United States placed sanctions on Venezuela in 2019 after President Nicolas Maduro claimed to win re-election, but it’s widely believed that fraud and corruption enabled him to stay in office.

Lifting those sanctions would allow the US to invest in Venezuela’s oil industry, which was battered by the 2019 sanctions, and help raise the country’s oil production from its current levels of around 800,000 barrels per day, as reported by the Wall Street Journal. Venezuela also claims to have the largest strategic oil reserve in the world.

The strategy is not without consequences. There is bipartisan opposition from American lawmakers to work directly with Maduro, who’s an authoritarian leader. Some claim that doing so would insult Venezuelans aspiring to live in a democratic state.

“I would strongly oppose any action that fills the pockets of regime oligarchs with oil profits while Maduro continues to deprive Venezuelans of basic human rights, freedoms, and even food,” Sen. Bob Menendez (DN.J.) said in a statement.

Even if the United States did take this route, it would be costly and time-intensive.

Venezuelan oil production has been severely impacted by sanctions over time; At its peak, the country was producing more than 3 million barrels per day but plummeted to around 300,000 in 2020 and has only rebounded to around 800,000 barrels per day, according to the Wall Street Journal. Necessary infrastructure to ramp up production would require billions in investment and restructuring, which could take months, if not years, to come to fruition.

What Will Be the Best Way to Lower Gas Prices?

As of now, only two of the four proposed plans—releasing oil from the strategic reserves and authorizing summer sales of E15 gasoline—have actually been implemented.

But experts agree that none of them will do much to alleviate gas prices in the short term.

There are some suggestions for the US to ramp up its own oil production, something that Democrats typically oppose, to make up for what’s been lost in the world’s supply. Others argue that current events could push the western world toward renewable energy incentives and investment, which Americans are largely in favor.

Regardless, the country is now facing a new reality in terms of how it will acquire energy commodities—and at what price, both literal and human, in the case of Venezuela.

“Even if Russia were to stop tomorrow, there’s a lot of long-term issues that have been opened up here,” Secco says. “A lot of the people that have the biggest capacity to supply oil around the world have questionable records when it comes to the way they behave, so I think there’s going to be a little bit of a rethinking of that and what it means for domestic US energy policy.”

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