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With gasoline and diesel prices still soaring amid supply disruptions caused by the Iran war, lawmakers are rolling out proposals aimed at easing the strain on household budgets.
This month, members of the House of Representatives introduced several bills that would address the issue in different ways. These include suspending federal gasoline and diesel taxes, restricting diesel exports, and allowing workers to deduct thousands of dollars in commuting expenses from their taxable income.
The new proposal comes as affordability remains a key issue ahead of the Nov. 3 midterm elections. The Reuters/Ipsos poll of 1,167 adults conducted Aug. 28-31 found that nearly half (47%) of registered voters surveyed said the cost of living was the most important factor when deciding to vote.
Gasoline and diesel prices have soared in recent months due to rising oil prices and disruptions to global refining and fuel supplies amid both the Middle East conflict and the Russia-Ukraine war.
As of Tuesday, the national average price for a gallon of regular unleaded gasoline was about $4.48, according to AAA. This is up from $4.10 a month ago and $3.18 a year ago. Diesel prices also rose, reaching a national average of about $6.53 per gallon on Tuesday. This is up from about $5.59 a month ago and about $3.69 a year ago.
Proposed tax cuts would offset commuting costs
A bipartisan bill has been introduced Monday that would create a tax credit for commuting costs worth up to $4,080 per year, or $340 per month, according to a release from Rep. Laura Gillen (D.N.Y.), who sponsored the bill along with New Jersey Republicans Jeff Van Drew and Rep. Tom Keene Jr. If filing jointly, the deduction limit is doubled.
The bill, called the Commuting Costs Lower Act, would establish tax credits for commuting costs related to gasoline, public transportation, and tolls. This deduction is “above the line,” meaning it is available to all taxpayers, not just those who itemize the deduction. Applies to expenses incurred after December 31st.
“If businesses can deduct the costs of doing business, then workers should be able to deduct the costs of traveling to and from work,” Van Drew said in the release.
But the proposal has limitations, said Garrett Watson, vice president of federal tax policy at the Tax Foundation, a research organization.
“Taxpayers will only get a tax break during tax season, which doesn’t help in the short term,” Watson said. “Low-income taxpayers may see little benefit because they would need to have offsetting taxable income to benefit from the deduction.”
Gas tax suspension could result in small savings
Meanwhile, Rep. Andy Harris (R-Md.) introduced a bill last week that would temporarily suspend federal excise taxes on gasoline and diesel until Dec. 31.
According to the U.S. Energy Information Administration, federal taxes and fees are 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel. These levies primarily fund highway and public transportation projects.
The move mirrors a similar proposal that surfaced in the spring, shortly after the Iran war began.
The average gas tank in a passenger car has a capacity of 12 to 16 gallons, while the tanks in SUVs and trucks are even larger, according to car research website Edmunds.
If the tax were suspended, the savings on gasoline purchases would be $2.76 per 15-gallon fill-up. With diesel, you save $3.66 per 15 gallons.
Watson said it’s unclear whether all of those savings will reach consumers. “If demand responds to the outage, pre-tax prices could rise, benefiting producers,” he said.
Diesel export restrictions aimed at increasing supply
Other lawmakers are taking a different approach to lowering diesel prices.
Rep. Tim Burchett (R-Tenn.) introduced two bills last week that would limit U.S. diesel exports as a way to lower prices.
One bill would ban exports until January 2027, and the other would impose a ban if the national average diesel price reaches $5 a gallon, and would allow exports to resume after that average remains below $4.50 a gallon for 30 consecutive days.
The idea is that keeping more domestic diesel in the U.S. could increase supply and lower prices. But energy analysts say such a move could have unintended consequences for global markets.
“The export embargo could temporarily lower diesel prices in the Gulf of Mexico, but there is no guarantee the relief will reach the highest-priced regions and over time it could reduce refinery operations and tighten supplies of other fuels, including gasoline,” Patrick de Haan, head of petroleum analysis at GasBuddy, told X-Post on Monday.
It is unclear whether Congress will be able to consider these bills when lawmakers return after the midterm elections.
