U.S. President Joe Biden is considering declaring a federal gas tax holiday and curbing some tariffs on imported Chinese goods to help Americans cope with the surging cost of consumer goods, Treasury Secretary Janet Yellen said Sunday.
“President Biden wants to do anything he possibly can to help consumers,” Yellen told ABC’s “This Week” show. “Gas prices have risen a great deal and it’s clearly burdening households.”
U.S. gasoline prices are at an all-time high of about $5 a gallon (3.8 liters), up more than 48% over a year ago. She said eliminating the 18.4-cent-per-gallon federal gas tax for a time was “an idea that’s certainly worth considering” and that Biden was willing to work with Congress to enact it.
Biden last week called on major oil refinery companies to take “immediate actions” to increase supply, telling them in a new letter that “historically high” profit margins were unacceptable as prices at service station pumps for Americans continued to soar.
American Petroleum Institute Chief Executive Mike Sommers rebuffed Biden’s complaint, saying, “The administration’s misguided policy agenda shifting away from domestic oil and natural gas has compounded inflationary pressures and added headwinds to companies’ daily efforts to meet growing energy needs while reducing emissions.”
Yellen, on ABC, said, “What’s happened is production has gone down. Refinery capacity has declined in the United States and oil production has declined. I think producers were partly caught unaware by the strength of the recovery in the economy. High prices should induce them to increase supply.”
But she called the higher prices “a medium-term matter,” stressing the need to continue to move to renewable energy sources.
Food prices, monthly rental payments, airline fares, housing and other costs of daily life in the United States have risen sharply, up 8.6% in May compared with a year ago, the fastest increase in 40 years.
Analysts point to a variety of causes for the inflation: strong consumer demand, Russia’s invasion of Ukraine, worldwide supply chain disruptions and sizable government payments to most American consumers that put extra cash in their pockets as the coronavirus pandemic swept into the country.
Yellen said Biden was also reviewing the tariff policy toward China because some tariffs imposed by the previous administration of former President Donald Trump served “no strategic purpose and raise costs to consumers.”
“Inflation really is unacceptably high,” Yellen said. Part of the reason, she said, is that Russia’s war on Ukraine has boosted gas and food prices.
She said American consumers cannot expect immediate relief, but “over time, I would certainly expect inflation to come down.”
Yellen said she expected the American economy, the world’s largest, to slow in the coming months, but added, “I don’t think a recession [two successive three-month periods of declining growth] is at all inevitable.”