Democrats are leaning into midterm affordability concerns by proposing a federal gas tax holiday as the ongoing conflict in the Middle East sends prices at the pump skyrocketing.
Sens.
Gas tax holidays aren’t a new idea. The proposed federal bill mirrors efforts in states like New York, Alabama, Pennsylvania, and South Carolina, where lawmakers are considering similar measures. Indiana, Georgia and Utah have already announced holidays.
And on Sunday, Energy Secretary Chris Wright said the Trump administration supports “all measures that can be taken to lower the price at the pump,” when asked if he would support suspending the federal gas tax.
But Kelly said the Republican congressional response “hasn’t been great so far.” Still, it’s a sign that both parties are looking for opportunities to show they’re addressing energy affordability issues ahead of midterm elections.
Gas prices keep climbing as the US-Israeli war with Iran continues, disrupting trade through the Strait of Hormuz, where much of the world’s fuel supply flows.
The national average gas price was $4.45 a gallon as of May 4, according to the Bloomberg Terminal. That’s the highest price since 2022, when Russia’s invasion of Ukraine scrambled international gas markets.
That could be a problem for Republicans. Adam Hoffer, director of excise tax policy at the Tax Foundation, compared fuel prices to giant billboards beside every American roadway that advertise how the current administration is doing.
“A lot of information gets reflected in that one price posted outside of the gas station,” he said.
Still, Hoffer estimates consumers would only save about 60 cents at the pump per trip even if legislation to suspend gas taxes passed.
Kelly, who isn’t up for reelection this year but rumored to be eyeing a presidential bid, said he understands people are struggling with rising costs. He blamed President Donald Trump for “getting our country into a war against Iran with no clear strategy or plan.”
“They need more relief,” Kelly told Bloomberg Tax.
Campaign Efforts
Gas tax suspension has increasingly become a campaign issue that highlights a difference with incumbents.
Rep.
In Texas, Senate contender James Talarico, a Democratic state representative, is also campaigning on a federal gas and diesel tax holiday.
“The people who started this war in Iran don’t feel it the way we do,” Talarico said in a campaign video posted to social media. “They don’t fill up the tank halfway and then stop because they see the price climbing.”
Incumbent Sen.
Gas taxes pay for state and federal transportation spending, and those programs are already underfunded.
Congress, which is grappling with a new surface transportation funding bill this year, hasn’t raised the federal gas tax since 1993. The tax value hasn’t kept pace with inflation and has fallen by more than half since then, the Tax Foundation estimated.
“Just eliminating it at this time for the short-term pain of increased gas prices, I think, is not the best way to approach it,” Cornyn told Bloomberg Tax.
Given the conflict in Iran, increasing fuel supply to bring prices down could prove difficult, said the Tax Foundation’s Hoffer.
“Until things stabilize there, we are most likely going to be sitting with a period of higher fuel prices,” he added.
To contact the reporter on this story:
To contact the editor responsible for this story:
Learn more about Bloomberg Law or Log In to keep reading:
See Breaking News in Context
Bloomberg Law provides trusted coverage of current events enhanced with legal analysis.
Already a subscriber?
Log in to keep reading or access research tools and resources.