U.S. Department of Transportation finds the average American drives 14,263 miles annually. With the EPA estimating the average fuel economy at 25.4 miles per gallon, Americans purchase roughly 562 gallons of gas each year.
So, how much of that purchased fuel is taxed?
According to the American Petroleum Institute, Americans on average pay 57.09¢ per gallon in gas taxes—18.4¢ per gallon in federal gas taxes and 38.69¢ per gallon in state gas taxes. This means the average American spends $320.85 in gas taxes each year.
However, these annual gas tax estimates might shift in coming months.
The Biden administration announced Wednesday, June 22, it is calling on Congress to suspend the federal gas tax for three months (through September).
If Congress agrees to remove the tax, gas prices will be lowered 18¢ per gallon while diesel will drop 24¢ per gallon.
U.S. Natural Gas to See Pumps Overseas
The news comes as a major U.S. natural gas exporter, Venture Global, penned an agreement to supply a German company, EnBW, with natural gas.
Beginning in 2026, EnBW will buy 1.5 million metric tons (MMT) of natural gas from Venture Global each year for 20 years.
According to Venture Global, half of the promised natural gas will come from their Louisiana facility that is currently under construction. The other half will be produced in a second Louisiana facility the company plans to have up and running by the 2026 contract window.
Paving the Way to Export Restrictions
Purchase agreements on natural gas combined with rising pump prices is a recipe for government interference, according to Jim Wiesemeyer, Pro Farmer policy analyst.
He says Venture Global’s agreement with EnBW will “put the pressure on” for U.S. export restrictions, which he says we have already watch play out in the markets.
“Over the weekend we had a down-tick in energy prices,” says Wiesemeyer. “It’s probably not going to last long, but it’s something to watch out for.”
More at Stake
Energy markets weren’t the only fuel piece making moves over the weekend.
Wiesemeyer told AgriTalk Host Chip Flory that recent confrontation in the Strait of Hormuz—between the Persian Gulf and Gulf of Orman—involving two U.S. ships and three Iranian naval vessels demands our attentions, as it could be another fuel domino waiting to fall.
“The Strait of Hormuz is the checkpoint for global oil shipping, he says. “If something were to occur there, all bets are off on whether or not they’ll halt or suspend natural gas exports.”
Ramping Up Production State-Side
While natural gas companies make international deals, government officials are looking for ways to ramp up production in the U.S.
U.S. Energy Secretary Jennifer Granholm is set to meet with refineries this week to find out why refiners aren’t producing more. According to Wiesemeyer, the government already knows the answer.
“They’re going to hear what refiners having been saying for weeks,” he says. “They’re already at near-capacity and it’s primarily due to increased regulations.
Flory says with refiners nearly at capacity, increased oil production won’t necessarily translate to lower gas prices. Wiesemeyer says the only way more oil will lower prices is if the suffocating refiner regulations are loosened.
According to Wiesemeyer, the Biden administration has tightened refiner regulations 2- to 2.5-times more than President Obama. He foresees legislation on crude oil will lower gas prices. Until then, he believes prices will continue to climb.
More on fuel:
Biden to Call on Congress to Suspend Gas and Diesel Tax This Summer
Farmers Are Now Paying Above $5 For Off-Road Diesel, And It’s More Than Just Russia to Blame
EPA Proposes New Rules on RFS, Finalizes Biofuel Blending Requirements
