Ever since the start of the Ukraine conflict, gas prices have been soaring. And at a time when living costs are up across the board, many Americans are having a hard time keeping up.
Recently, President Biden announced plans to impose a gas tax holiday for three months. Doing so will automatically make the cost of gas less expensive. But will that result in a lot of savings? Here’s what you need to know.
Crunching the numbers
Gas taxes are set at both the federal and state level, and to be clear, Biden’s suspension applies only to the former, not the latter. Meanwhile, the current federal gas tax rate is $0.184 per gallon. So once that gas tax holiday kicks off, you’ll pay that much less per gallon every time you fill up.
Of course, the amount you actually save will depend on a couple of factors:
- How much you drive
- How fuel-efficient your vehicle is
In 2019, the average American drove 14,263 miles, according to the Federal Highway Administration. That amounts to about 1,189 miles per month.
Now, let’s talk miles per gallon. These days, new cars sold in the U.S. average 24.9 miles per gallon, according to the Environmental Protection Agency. But some vehicles do a lot better on fuel efficiency, and some — particularly older cars — do worse.
So, let’s assume the average American drives a newer car that gets 24.9 miles to the gallon, and also drives 1,189 miles monthly. That means the typical consumer purchases roughly 48 gallons of gas a month.
When we apply a discount of $0.184 per gallon, Biden’s proposal could save the average driver $8.83 a month. Since the gas tax holiday is being presented as a three-month reprieve, all told, that’s $26.49 in savings — a decent amount of money to bank, but not all that substantial a sum.
Of course, the amount of money you save could be more substantial. Maybe you put in more miles on the road, and maybe your car is older and therefore isn’t as fuel-efficient. But these calculations should give you an idea of how much savings you may be in line for.
Other ways to save at the pump
A lot of consumers are desperate to cut their gas costs. If you’re one of them, perhaps the best thing you can do is try to drive less, whether by planning shopping trips more efficiently or by carpooling to different places whenever possible.
It also pays to snag discounts on gas where they’re available. If your local station offers a cheaper price point for paying cash instead of swiping your credit card, do it. Chances are, the amount of savings you’ll reap will exceed the cash back you’d get on a credit card purchase.
Unfortunately, we could be in for many more months of sky-high gas prices. The fact that the Biden administration is taking steps to provide relief is comforting — even if the impact doesn’t end up being all that substantial for the average driver.
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