With such inelastic demand, only one market function can reduce prices, and keep them lower, in the long run: inducing supply, writes TianatheFirst. 'Begging the crown prince might do that. Begging the oil companies probably won't.'
on the campaign trail by calling it a global"pariah" and snubbing its de facto enlightened despot, Crown Prince Mohammad bin Salman, Biden plans to head to the kingdom next month to beg the crown prince to bail him out by drilling more and bringing's prices down. In a letter last week, Biden also begged domestic oil refiners to produce more product stateside, and after months of dithering, he has now begged Congress to pass a three-month gas tax holiday.
For starters, the impact of the federal gas tax is minimal. Only three states have lower state gas taxes than the federal levy of about 18 cents per gallon, and some, such as California and Pennsylvania, where the gas tax is more than half a dollar per gallon, impose state taxes multiple times greater than the federal fee. Furthermore, the benefit of a gas tax holiday may not be passed on to consumers but rather absorbed as profits by oil companies.
High oil prices may cause consumers to choose to forgo an annual summer road trip or take an Amtrak or Greyhound, but for most people outside the nation's major cities, the number of miles a household must drive, and thus the gallons of gas it must consume, is fixed. A commute to work simply cannot become shorter nor can the daily trip to school, and most families will consider other regular trips some of the last items they're willing to strike from their budgets.
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