U.S. Rep. Sharice Davids, D-Kansas, welcomed President Joe Biden’s endorsement of suspension in the federal fuel tax, but she urged Congress to adopt a bill dropping the tax until Jan. 1. (Kansas Reflector screen capture from campaign video)
TOPEKA — Three-fourths of registered voters in a national survey shared eagerness to answer surging gasoline prices by temporarily waiving federal gasoline taxes and pressuring oil companies to expand extraction of domestic crude.
Brewing debate between U.S. Rep. Sharice Davids, the Democratic incumbent in the 3rd District of Kansas, and Amanda Adkins, the likely Republican nominee in that Kansas City metropolitan district, suggest those ideas, while attractive to these candidates, weren’t simple solutions to consumers’ problem with rising fuel prices.
Davids planted her flag in February by calling for suspension of the federal government’s 18.4 cents per gallon tax on gas until Jan. 1. She argued lifting the excise tax through the remainder of 2022 would deliver prompt relief to Kansas consumers. And, she said, the law would need guard rails to prevent energy companies from pocketing the tax cut.
“Global uncertainty and rising costs are really impacting everyday Kansans,” Davids said. “That’s why I’m pushing for a federal gas tax holiday, which would help reduce prices by 18 cents a gallon. Which, when you’re filling up a full tank of gas, can really add up.”
Companies and organizations engaged in federal infrastructure construction denounced the proposed suspension of the tax because it could undercut revenue earmarked for highways.
“It is terrible tax policy and terrible environmental policy,” Alice Abreu, director of the Center for Tax Law and Public Policy at Temple University, told Marketplace Morning Report. “It’s terrific politics.”
Davids also urged Congress to investigate potential price gouging by oil companies piling up record profits. She voted for bipartisan sanctions against Russia for invading Ukraine, supported release of oil from the Strategic Petroleum Reserve and endorsed investment in renewable and alternative fuels.
Drill baby drill
Adkins, the Republican taking a second shot at unseating Davids, said she preferred Congress help Kansans trim the $3.76 per gallon paid at stations by opening floodgates to domestic production of oil.
Adkins said the gasoline tax suspension sought by Davids was “a gimmick” and “publicity stunt.” Adkins said the idea of temporarily dropping the federal gas tax had “been disparaged by transportation groups.”
“America needs to boost domestic production, be energy independent and we need to lower the overall costs of goods and services in this country,” Adkins said.
Meaningful increases to output of fossil fuels in new U.S. oil fields on federal or private land could take years, given shortages of labor and heavy equipment. And, because oil is a global commodity, the additional crude may not have much influence on gas prices paid by American consumers.
The strategy also begs the question: Why would energy companies striving to please shareholders be motivated to invest in expanding the oil supply for the purpose of lowering prices at the pump?
“Oil and gas companies do not want to drill more,” Pavel Molchanov, an analyst at Raymond James, told CNN Business. “They are under pressure from the financial community to pay more dividends, to do more share buybacks instead of the proverbial ‘drill baby drill,’ which is the way they would have done things 10 years ago. Corporate strategy has fundamentally changed.”
In March, Morning Consult and Politico released a poll of 2,000 registered voters indicating interest in lower gas taxes and higher domestic oil output. In the survey, 73% approved of a temporary halt to the federal tax on gas. Interest in lifting state gasoline taxes was nearly as high at 72%.
The same survey revealed 72% wanted domestic producers of oil to increase the supply brought to the market. In addition, 63% were fond of releasing oil from the Strategic Petroleum Reserve, 56% backed opening more public lands to drilling and 46% wanted to suspend federal rules limiting use of E15.
‘Pain at the pump?’
The Democratic Congressional Campaign Committee put up a billboard targeting Adkins for her opposition to the tax break. The Johnson County billboard read: “Pain at the pump? Amanda Adkins opposes gas tax cuts.”
The billboard was to be positioned for a week on Interstate 35 near Roeland Park so it would be visible for Kansans driving to work and school.
“This is yet another reminder for Kansans that when Amanda Adkins had the chance, she opposed commonsense plans to lower gas prices and ease their pain at the pump,” said Johanna Warshaw, a spokesperson for the DCCC.
Adkins said the DCCC attacked her for seeking “real solutions to rising gas prices, not just political theatrics like Sharice’s federal gas tax holiday.”
She said a tax holiday had been criticized by economists who worked with President Barack Obama because the change wouldn’t make a large dent at the pump.
“We are pushing back against the Democrats’ lies,” Adkins said.
Her campaign placed a rival billboard on Interstate 35 and U.S. 69 to draw a “connection for voters between high gas prices and Sharice Davids’ votes supporting Biden’s anti-energy policies.”
The construction lobby
The U.S. Chamber of Commerce objected to suspension of the federal gas tax because it could drain a key source of revenue to the Highway Trust Fund, which finances investment in transportation infrastructure. Congress significantly increased spending in the federal budget on such projects with the $550 billion Infrastructure Investment and Jobs Act in 2021.
Neil Bradley, executive vice president of the U.S. Chamber, said the infrastructure law was a “generational opportunity to fix and modernize America’s transportation infrastructure.”
The Transportation Construction Coalition, comprised of 33 industry associations engaged in transportation projects, was among groups advising congressional leaders to oppose a tax holiday.
“The view that federal fuel taxes have a discernible impact on prices at the pump misses the mark,” the coalition said. “The federal gasoline tax has not been increased since 1993 when gasoline was around $1.00 per gallon nationally. Meanwhile, gasoline prices have increased roughly 250 percent, which indicates other factors, like supply and demand, input costs and geopolitics are drivers of price fluctuations — not federal fuel taxes.”
Adkins‘ father, Alan Landes, worked more than 40 years at Herzog Construction, which has ties to the coalition and ranks among the largest road builders in Missouri. The coalition is co-chaired by the Associated General Contractors of America. Adkins’ father served as the president of the contractor group in 2014.
Herzog employees, including Adkins’ family, donated $430,000 in support of her congressional campaigns and to a super PAC launched by her father in 2020. Campaign finance reports indicate Landes donated $321,000 to Adkins’ races for Congress.
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