Goldman's Currie: Suspending the federal gas tax 'not the best idea'

Published Wed, Jun 22 202210:32 AM EDTUpdated Wed, Jun 22 202212:15 PM EDT

President Joe Biden is calling on Congress to temporarily suspend the federal gas tax — a move Goldman Sachs' global head of commodities research Jeff Currie said is "not the best idea." On CNBC's "Squawk Box" Wednesday, Currie said that ultimately such a move would prove bullish for energy prices. "It's reducing the price to the consumer. The law of demand says they're going to consume more if you take down the price," he said. Biden's plan asks Congress to suspend the federal tax on gasoline and diesel fuel for three months, which coincides with the summer driving season. According to a fact sheet from the White House, such a move would not see money taken away from the Highway Trust Fund. The administration said the proposal would use "other revenues to make the Highway Trust Fund whole for the roughly $10 billion cost." The president is also asking states to suspend their gas taxes, or find other ways to provide relief for consumers. The federal tax is 18 cents per gallon of regular gasoline, and 24 cents per gallon of diesel. A suspension would "give Americans a little extra breathing room as they deal with the effects of [Russian President Vladimir] Putin's war in Ukraine," the White House said. The surge in prices at the pump has caused a headache for the Biden administration ahead of the upcoming midterm elections. The national average for a gallon of gasoline surged above $5 for the first time ever earlier this month. Prices have retreated slightly, with the per-gallon national average at $4.955 on Wednesday. That's up 36 cents in the last month and $1.88 more than last year. "The product crisis is where the shortage is," Currie said, referring to petroleum products like gasoline, diesel and jet fuel that are refined from crude oil. "The administration is very aware of this, which is why it's targeting the products as opposed to the crude," he added. Last Wednesday, Biden called on U.S. oil refining companies to produce more in order to alleviate the high prices consumers are facing. "At a time of war — historically high refinery profit margins being passed directly onto American families are not acceptable," the president said in a letter to oil companies including Exxon Mobil and Chevron last week. Currie said that refining capacity in the U.S. is down by about 1.2 million barrels per day. "This is a global problem, not a local problem," he added. The president is expected to make comments later on Wednesday.