(NewsNation) — A year ago, the national average for a gallon of regular gas was just over $3, according to AAA. On Thursday, AAA reported the national average for regular gas sat at $4.95 per gallon.
President Joe Biden called on Congress Wednesday to pass a federal gas holiday through September, an attempt to give drivers some relief at the pump.
A NewsNation/Decision Desk HQ poll released Thursday found that 59% of participants think gas prices will be higher six months from now, and 53% of voters said they are worse off financially now than a year ago amid historic inflation.
Just over 97% of poll participants said they are concerned about inflation, and 71.68% believe inflation is the biggest problem the U.S. faces.
During an appearnace on “Morning in America,” financial and tax strategist Rebecca Walser answered questions from NewsNation viewer Tom Deschaine on gas prices, a possible gas tax holiday and inflation.
Q: Is it true that gas prices could be higher six months from now?
Walser: We have a gas tax. It’s 18.4 cents for regular, and it’s 24.4 cents for diesel. So, obviously, Biden is saying Congress, he’s actually telling Congress to pass the three-month reprieve.
We would see the prices go down. But obviously, as a percentage of almost $5, that’s a lot less as a percentage than it would be of the $3 that we were at last year — and the $2 and something that we were at prior. So, it would temporarily ease prices.
I think what a lot of people are afraid of is that the retailers will say, “Oh, well, we have this easement of 20 cents almost now, we can creep it back up, you know, for our profit margin.” And so we have to make sure that the actual tax gets passed on to the consumer, and not just sort of hidden by the fact that they’re actually raising prices continuously now.
Q: The president has proposed a pause on taxes that we pay at the pump. How’s that gonna affect our highway projects that are ongoing and in the future?
Walser: When you have the gas tax not funding the infrastructure projects, that will cause delays. I also am very concerned about the diesel shortage, because most of the infrastructure projects are run by equipment running on diesel. So we have a double whammy here of shortages on the diesel side and high prices. And if you don’t have the investment capital that’s coming in, either the government has to fund those projects continuously elsewhere with other sources, or they have to stop them. And I think it will be a combination of both. It’s really a subsidy that we have to pick up somewhere else with more taxes.
Q: All this money that we printed and put into the economy, how has that impacted Inflation?
Walser: It’s a really simple answer. So really, since coronavirus, March of 2020, the U.S. between three different legislative pieces, the Cares Act, the Heroes Act in the AFP — an American Family Plan — and the Federal Reserve. The Federal Reserve was printing $120 billion of stimulus while we were in the thick of the pandemic. We just stopped that policy recently. So, that’s $1.3 trillion a year.
What happens is when you have a finite amount of goods and services, or if those even go down, because we close down, so we definitely had our GDP drop. When those things go down, you have more money chasing the same amount of goods and services, and that automatically makes the prices go higher.
That’s the definition of inflation, more dollars chasing the same set of goods and services. And so prices go up.
So what the Federal Reserve is trying to do is break that by making things a lot more expensive by raising interest rates. At the same time, we’re seeing a double whammy. Instead of pushing that $120 billion into this system every month, they’re actually beginning now quantitative tightening, which has them sucking about $137 billion out of the system a month.
We have never seen such aggressive anti-stimulus tightening in the history of the Fed. This is unprecedented after we unprecedentedly had $10 trillion sort of created in the last two years. So unfortunately, the economic impacts are going to be severe.