President Donald Trump said Tuesday that a suspension of the federal gas tax is under consideration, offering no further detail, as average pump prices stood well above where they were a year ago.
What would it save?
18.4 cents per gallon, the current federal rate on gasoline. The national average for regular unleaded was $4.36 on Tuesday, against $3.13 a year earlier. A full suspension passed entirely to consumers would reduce that by roughly 4 percent, which on a 15 gallon fill is about $2.76.
Would drivers see all of it?
Not necessarily. A tax cut at the wholesale level reaches the pump only if retailers and distributors pass it through rather than absorbing part of it as margin. Studies of previous state level suspensions found pass through was substantial but incomplete, and it varies by market competitiveness. The saving at the pump is likely to be less than the full 18.4 cents.
What does the tax fund?
Highways, which is the part the proposal has to answer for. The federal gas tax is the primary revenue source for the Highway Trust Fund, which pays for road and bridge construction and maintenance and for transit. The fund has run structural deficits for years and has required repeated transfers from general revenue. Suspending the tax removes income from an account already short, and any suspension would need either a replacement transfer or a reduction in spending.
Has this been tried?
Proposed in 2022 under the previous administration and not enacted, with several states suspending their own fuel taxes instead. Those state suspensions produced measurable but modest price reductions and faced the same revenue question when they expired.
Can the president do it alone?
Almost certainly not. Tax rates are set by statute and changing one generally requires Congress. A suspension would need legislation, which means the question is not whether the administration favours it but whether it can pass.
What is the argument for it?
Immediate relief at a moment of strain. Prices up more than a dollar a year on year hit lower income households hardest, since fuel is a larger share of their spending and most cannot reduce driving much. Supporters argue the Highway Trust Fund is already subsidised from general revenue, so the practical change is modest.
What is the argument against?
That it is small, temporary and expensive. A few cents a gallon is thin relief against a dollar increase, forgone revenue has to be replaced, and economists have generally found fuel tax holidays deliver less to consumers than they cost the public. Critics also note that suspensions are easier to start than to end.
What is driving prices?
Contested. The president said the Strait of Hormuz is open with flows at or above prewar levels and that refineries are now the constraint, citing Ukrainian strikes on Russian facilities and closures in California. Those are his characterisations. Independent shipping data confirming Hormuz volumes has not been published in the available account, and refinery capacity is a genuine factor whose weight relative to crude supply has not been established.
