President Biden calls on Congress, States for fuel tax holiday; increase in refinery capacity


President Biden called on Congress to suspend the federal gas tax for the next 90 days, through the busy summer driving season—18 cents per gallon for gasoline and 24 cents per gallon for diesel. He also called on states to suspend their state gas taxes as well or to find other ways to deliver some relief. State gas taxes average another 30 cents per gallon.

He also continued his calls for the oil industry to increase refinery capacity to increase production.

According to the US Energy Information Administration (EIA), as of 13 June 2022, the average price of US regular gasoline was $5.006 per gallon, up $1.937 from a year ago. (An update was due 21 June, but EIA said that data product releases scheduled for this week—20 June 2022—will be delayed as a result of systems issues.) The average price of US on-highway diesel was $5.718 per gallon, up $2.432 from a year ago.


The US Energy Information Administration’s (EIA) latest refinery capacity report (21 June 2022) listed 130 operable refineries in the US, with 5 idle. That figure is down from 141 refineries in 2017, with 4 idle.

Operable capacity for the refineries is 17,789,010 barrels per calendar day in 2022, down from 18,976,085 in 2020. As of 10 June, EIA reported 93.7% utilization of refinery operable capacity.


In a letter sent to President Biden on 15 June, the AFPM (American Fuel & Petrochemical Manufacturers) and the API (American Petroleum Institute) listed what they called seven realities about the current situtation:

  1. Refined product prices are determined on the global markets. Crude oil is always the top contributor to the prices US drivers see at the pump. Monthly data from the EIA shows that crude oil is 60% of the price of gasoline, 17% is refining costs, 12% is federal and state taxes, and 11% is distribution and marketing. Refined products from crude are globally traded commodities, priced in a competitive global market. Refined product prices are set by the marginal supply costs of bringing the incremental barrels of products to market. US refiners have been operating at historically high utilization rates and producing about as much product as they have over the past five years. Particularly on the East Coast, which has lost 70% of its pre-2009 refining capacity, incremental supplies have historically been imported from international markets to supplement domestic manufacturing. However, the cost of refining in other nations is currently higher. European refiners, for example, are now paying at least three times as much for natural gas, a primary refinery energy source, than US refineries.

  2. US refineries are operating at or near maximum utilization. The 94% of capacity listed by the EIA is among the highest in the world; US refiners are also producing more gasoline and diesel than current US demand, the organizations said. Moreover, many facilities have safely delayed projects and/or maintenance so as to not take production offline and instead continue to provide supplies and build inventories.

  3. About half of US refinery shutdowns are conversions to renewable fuel production. Other important suppliers to the US., including refineries in Canada, are being similarly converted. These investments cannot be easily or quickly undone.

  4. US refining is a long-cycle business. Refiners do not make multi-billion-dollar investments based on short-term returns. They look at long-term supply and demand fundamentals and make investments as appropriate. To that end, following on Biden’s campaign promise to “end fossil fuel,” policy and investment signals are being sent by various federal agencies and allied state governments to the market about the refining industry:

    • EPA just finalized a light duty vehicle standard that incentivizes at least 17% electric vehicle sales by 2026. For context, in the first quarter of this year, EV sales accounted for less than 5% of new car sales, despite rising gasoline prices. Similarly, NHTSA’s new fuel economy standards project to reduce gasoline consumption by more than 200 billion gallons through 2050.

    • The administration has encouraged California and other states to go even further, working to prohibit the sale of new gasoline-powered vehicles in just over a decade, with aggressive interim targets.

    • Other federal agencies are following through on Biden campaign promises to make capital formation more expensive for traditional energy projects. This is clear in both words and actions, and the most recent example is the current Securities and Exchange Commission rulemaking on climate risk disclosures.

    • Multiple federal agencies continue to make it more difficult to build and maintain energy infrastructure projects, whether traditional or renewable.

    • EPA just set Renewable Fuel Standard (RFS) volumes at the highest levels ever, which by its nature is designed to reduce demand for refined petroleum products and incentivizes gasoline and diesel exports.

  5. Even if refiners could bring more refining capacity online despite these challenges, the result could be higher demand and higher costs for crude oil. Without corresponding increases in crude oil production, any benefit from incremental refining capacity would be essentially nullified by the increased crude oil demand and likely higher price. Hence, the importance of increasing crude oil production. This global crude oil supply issue is not likely to be solved quickly, even if more refining capacity were available.

  6. Current market conditions are complex and require a closer look. The timing and reasons for shutdowns of several refineries, including the Philadelphia Energy Solutions and Shell Convent refineries, were primarily due to lack of buyers willing to continue operating the facilities as petroleum refineries given growing rhetoric about the long-term viability of the industry.

  7. US refiners are adding new US refining capacity where it makes business sense. For example, ExxonMobil is expanding the capacity at its Beaumont, TX refinery and Valero at its Port Arthur, TX refinery for a combined total of 300,000 barrels per day.

Today’s situation did not materialize overnight and will not be quickly solved. Although the Russian invasion is undoubtedly exacerbating the situation, today’s challenges are largely the result of high crude prices due to 1) a supply/demand imbalance, 2) logistics reshuffling as the world emerges from the pandemic, strong consumer demand, the ban on Russian products, and 3) policy decisions made at the federal and state levels over many years and by successive administrations.

—Letter to President Biden


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