Gasoline and diesel prices are creating a growing political and economic challenge for President Donald Trump, whose administration campaigned on lowering Americans’ cost of living, Bloomberg reports.
U.S. gasoline prices have climbed from about $3 a gallon when Trump began his second term to more than $4, a record high for this time of year, while diesel has surpassed $6 a gallon for the first time.
The diesel increase extends beyond the pump, affecting trucking, agriculture, railroads and construction and potentially raising the cost of goods and services. The bigger driver of global fuel-market disruptions is the Iran war, which has constrained shipments of refined oil products through the Persian Gulf and Strait of Hormuz. Russia’s diesel export restrictions and attacks on its refineries have also tightened supplies. Brown University estimates consumers have paid more than $128 billion in additional gasoline and diesel costs since the war began.
The Trump administration has taken several steps to contain prices, including releasing 172 million barrels from the Strategic Petroleum Reserve, temporarily waiving Jones Act shipping restrictions, allowing earlier sales of winter-grade gasoline and easing restrictions on tax-exempt red diesel.
So what options does Trump have left to try and bring down fuel prices? Here’s a look at a few:
Curb fuel exports
Trump could restrict U.S. diesel exports, keeping more fuel at home and potentially lowering prices, particularly on the East and West Coasts. But moving fuel from Gulf Coast refineries to those markets is constrained by pipeline capacity and shipping times. Trump recently appeared to rule out an export ban after the G7 announced plans to release fuel stockpiles.
Suspend federal gasoline and diesel taxes
Trump could again push Congress to temporarily suspend federal fuel taxes, including the 18.4-cent-per-gallon gasoline tax. Research suggests a gas tax holiday could lower pump prices by 10 to 16 cents a gallon, although consumers may not receive the full savings. The trade-off would be billions of dollars in lost federal revenue.
