Prices at the gas pumps are starting to cut majorly into the budgets of the average American.
With many states seeing prices over $5.00 a gallon and other places much higher, people are putting off travel, returning to remote work, and leaving their gig work jobs like Uber and Instacart - now desperate for other ways to make ends meet.
Because it's not just the price of gas that's rising; everything costs more than it used to, from food to rent and utilities and everything in between. But there's one place people can cut costs, and that's at the pump - by simply buying and using less.
President Joe Biden is searching desperately for some way to ease the pain at the pump and has proposed a three-month gas tax holiday, something his former running mate President Barack Obama dismissed as a "gimmick."
The proposed holiday is quickly gaining popularity as people envision what they can do with a few more bucks in their pocket, but there's a reason why it's never been a popular solution - and there's some question as to whether Senate Republicans will even go along with the idea.
A 3-Month Holiday: Gimmick or Great Relief?
Biden wants to institute a gas tax holiday that would run now through September.
But the impact at the pump would be modest - possibly around $0.18 a gallon. While it's appealing to consider saving that much, it may simply offer a band-aid that causes bigger problems later, such as raising inflation after the holidays.
USA Today reports, "Some economists warn it could drive up inflation once the holiday ends, deplete transportation funds and only reduce a fraction of the overall historic spike in gas prices. Environmentalists have argued a gas tax holiday undermines the goal of moving toward clean energy.
There's also no guarantee Biden's gas tax holiday proposal will pass Congress, where Democrats would need 60 votes in the evenly divided Senate to overcome any filibuster from Republicans.
A coalition of Senate Democrats from battleground states – including Raphael Warnock, D-Ga., Mark Kelly, D-Ariz., and Maggie Hassan, D-N.H. – in February proposed suspending the gas tax through the end of the year. But the legislation faced resistance from Republicans who slammed it as a political stunt to help Democrats in the midterms. The White House never rallied behind the legislation, which did not advance, but remained open to it publicly."
It would be a politically popular move but in the long run could make things worse. Aside from rising inflation, a return to higher demand could push prices higher again - offsetting any potential gain from the tax holiday.
So even though Biden seems focused on this as an option, it's unlikely to gain the support it needs.
Oil Prices Tumble
Meanwhile, oil prices are tumbling as fears of a recession begin to reverberate through the market.
As investors face the likelihood that people will contract their spending in the event of a recession, demand for oil could fall even further.
Per Marketwatch, "'Concerns about a recession and tomorrow’s meeting between US oil industry representatives and US President Biden are being cited as the reasons for the renewed price slide,' said Carsten Fritsch, analyst at Commerzbank.
'Biden had harshly and publicly criticised refineries last week, accusing them of producing too little gasoline and taking advantage of the record-high crack spreads to pocket profits at the expense of car drivers,' he added."
Unfortunately, the more Biden rumbles about a gas tax holiday, the more the oil industry is demonized, and the shyer investors are getting. It's a ripple effect spreading out from the White House, but it's meeting ripples from a million other directions. The cause of the gas price hike and inflation doesn't rest solely on the president's shoulders, but a solution may lie through legislation.