Why President Biden’s gas tax holiday won’t pass Congress

Yahoo Finance’s Rick Newman joins the Live show to discuss President Biden’s plea to Congress for suspension of the gas tax through September.

Video Transcript

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BRAD SMITH: Welcome back to Yahoo Finance Live this morning, everyone. President Biden officially called on Congress Wednesday to lift the federal gas tax for the next three months. However, the demand has drawn skepticism from both sides of the aisle and is unlikely to pass Congress. Let's bring in Yahoo Finance's Rick Newman on this. Rick, we discussed the likelihood of it yesterday. And so what new kind of criticisms have we seen come forward on both sides of the aisle here?

RICK NEWMAN: Republicans don't like it. They're not going to help Biden pass it. And there are objections within the Democratic Party. I mean, this is a very familiar dynamic by now. Biden wants to do something, and some Democrats support it. But you've got some who say, no, I don't want to do this. So you've got a couple of progressives, the liberals, who say, no, this would actually-- this would only just put more money into Big Oil's coffers. And you got people like Joe Manchin, the veto king, the senator from West Virginia, who basically says this would add to the deficit. And I'm not going to do it.

So this is not going to pass. This is looking ahead to the midterm elections. This is so some Democrats in Congress who have tough reelection races can say they strongly support this. I think the phrase Biden used yesterday is, let's give Americans a little breathing room. It's not going to solve the whole problem of $5 gasoline, but let's give them a little breathing room. And I think that's the type of phrase you're going to hear from some of these politicians.

Mark Kelly, the senator from Arizona, is an example. He actually sponsors a bill to suspend the gas tax. And he's one of the guys who's in a tight race. And so he wants to be able to tell voters in Arizona, I've got your back.

JULIE HYMAN: At the same time that the president is doing that, he's also on the other side, trying to put pressure on oil companies, right? Jennifer Granholm is meeting with oil executives today. And the administration's in a bit of a strange position because for the past couple of years, it's been really pushing the cleaner energy agenda and now is going not hat in hand, but, like, sort of bludgeoning in hand.

RICK NEWMAN: I think you could say they're begging.

JULIE HYMAN: Yeah, but they're begging in, like, this really aggressive way, right, while still sort of criticizing the companies, but asking them for help. But as we've talked about before, there's only so much help that can be given on that front.

RICK NEWMAN: Right, so, again, part of this is for show. The Biden administration need-- that he needs-- President Biden needs to show he gets the problem and he's trying to do something about it. There are things he could do that he's not doing, however.

I mean, the oil industry, for instance, has given the White House 10-- a 10-point plan. Here are 10 asks. Make it easier to get permits for pipelines. Speed up the permitting process for new construction, new infrastructure in the industry. Faster approval of leases, consistent policy on leases. And so those are the things the oil industry says might make a difference. And we're not hearing any of that from the Biden administration.

So Biden is in a terrible spot. I mean, I would say it's much worse than awkward. I mean, if he does the things that would bring more oil onto the market, he would basically be turning his back on all of his green energy pledges. And he would enrage half the Democratic Party, who thought this was the whole point of Biden getting elected. But he's going to pay-- he's not going to do that.

But he's going to-- without a doubt, he's going to pay a short-term price for that because voters do blame Biden for high gas prices. And it's-- Biden is on record saying he wants to essentially put the carbon industry out of business. He wants to see the decline of this industry. That's what he said when he was a candidate, and he's getting it. So he's getting what he asked for two years ago. And it's not working out for obvious reasons.

JULIE HYMAN: And meanwhile, the one thing, the big thing that really would help oil prices go down, he can't really do anything about. And that's Russia's invasion of Ukraine. And even if it stopped, right, even if the war stopped tomorrow, it would be hard to envision the rest of the world saying, OK, bring on the Russian oil again.

RICK NEWMAN: That's not what would happen, but if there were some resolution, if this were stopped, however it stopped, one thing that would happen is it would take the fear premium off the price of oil. So part of the reason for elevated oil prices is the fear premium, the concern that things are going to get a lot worse. So markets right now are pricing in the expected loss of about, let's call it, between 1 and 1/2 million to 2 million barrels per day of Russian oil, as those European sanctions tighten up and other things fall into place by, let's say, the end of this year.

If this war were to end, then that would be the ceiling on how bad it could be. And it could end up being not nearly that bad. So if the war ended, it's not as if sanctions on Russia would come off right away. But you take the fear premium out, and you would open the door to sanctions on Russia coming off in the future.

JULIE HYMAN: So why hasn't Biden, or the European counterparts, for that matter, been even more aggressive in trying to help Ukraine?

RICK NEWMAN: It's a very complicated question. You know, so the United States is getting more aggressive, sending more of those long range artillery systems that Ukraine has been asking for. But there's a line in the sand they don't want to cross. They do not want to provide fighter jets. And I'm not talking about NATO pilots flying those jets. They don't even want to provide the hardware.

You could say that Europe and the United States should provide every single piece of hardware the Ukrainians ask for that might bring about a faster end to this war however the war ends. There are risks to that. I mean, the two-- you know, you're provoking Russia more. That's obviously a big concern. How might Russia react?

So you wouldn't want to be the president trying to make all these decisions. I mean, it's very complicated. But it's a demanding job. And that's part of the job. So will he see an end to the Ukraine as part of the solution to the oil and gas price problem? He has not articulated that yet, but I think it's growing increasingly clear that is a huge part of the problem.

JULIE HYMAN: Yeah, I mean, he's certainly pointed the finger at that as the main reason for what's going on. Rick Newman, thank you so much.

RICK NEWMAN: Thanks, guys.

JULIE HYMAN: Appreciate it.