(NEW YORK) — For months, sky-high gas prices have bedeviled Americans. The nationwide average price for a gallon of gas stands just under an eye-popping $5 per gallon, AAA data shows.

But a significant policy change may soon offer drivers some relief. President Joe Biden on Wednesday will call on Congress to pass a gas tax holiday that would run through the end of September.

Suspending the federal gas tax, which amounts to 18.4 cents per gallon, would almost immediately reduce the price drivers pay at the pump, experts told ABC News. But they cautioned that the policy would slash funds for maintaining roads and highways, while potentially worsening a supply-demand imbalance and pushing prices even higher in the long term.

“As a motorist, I’ll take any price reduction I can get,” said Patrick De Haan, an energy analyst at GasBuddy. “As an analyst, I think it could exacerbate imbalances that could lead to higher prices.”

What is the federal gas tax?

The federal gas tax, first imposed as a 1 cent per gallon tax in 1932, makes up a portion of the price that drivers see at the pump. The tax gradually increased over the decades after its enactment, reaching its current level of 18.4 cents per gallon in 1993. Since 1997, all revenue from the federal gas tax has gone to the Highway Trust Fund, the major source of federal funding for highways, roads and bridges.

The federal gas tax has never been suspended, though a gas tax holiday was proposed by presidential candidates John McCain and Hillary Clinton during the 2008 campaign.

How would a gas tax holiday work?

A federal gas tax holiday, which would require a law passed by Congress and signed by Biden, would suspend the tax for a temporary duration. The proposal put forward by Biden on Wednesday will call for a suspension through September.

A handful of states — led by both Democratic and Republican governors — have suspended their gas taxes as a means of delivering some financial relief for drivers. Biden on Wednesday will call on states to suspend their gas taxes if they haven’t already.

But the moves only reduce costs by a fraction of the price. In New York, for instance, Gov. Kathy Hochul this month suspended a tax of 16 cents a gallon. With the average price of a gallon of gas in New York standing at $5, according to AAA, the tax relief amounts to a 3.2% cost reduction.

Suspension of the federal gas tax would also reduce the cost of a $5 gallon of gas by less than 5%. Still, consumers would likely prefer some relief to no relief.

What are potential downsides of a federal gas tax holiday?

There are two main potential downsides to a federal gas tax holiday. First, it would deny the federal government a primary source of funding for maintaining roads and highways. U.S. roads received a D grade last year in a report from the American Society of Civil Engineers. Eliminating the federal gas tax would likely leave them even worse off, experts said.

Second, as the U.S. struggles with an imbalance between low oil supply and high demand, a federal gas tax holiday would partially undermine the role that heightened prices play in decreasing consumer demand. In theory, if gas prices remain high or go even higher, people will buy less gas, which should help bring equilibrium between supply and demand, thereby reducing prices.

But a gas tax holiday would almost immediately reduce the price, which could increase demand and worsen the supply-demand balance even further, said De Haan, the energy analyst at GasBuddy.

“It would cause a jolt potentially to demand at a time when it is difficult for refiners to keep up with demand now,” he said.

What happens next?

If Biden decides to support a federal gas tax holiday, it would likely boost momentum in Congress for a law to enact it. But the passage of such a measure remains uncertain.

One such law, the Gas Prices Relief Act, has been proposed by Sen. Mark Kelly (D-AZ). It would eliminate the gas tax through the end of the year, and specifically stipulates that the price savings should be passed along to consumers.

In addition to Kelly, seven senators have backed the bill. So far, no Republican senators have supported it.

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(WASHINGTON) — President Biden will on Wednesday call on Congress to suspend the federal gas tax for three months and ask states to suspend their own gas taxes or provide commensurate relief to consumers, according to the White House.

The federal government charges an 18.4-cent tax per gallon of gasoline and a 24.4-cent tax per gallon of diesel. Suspending the tax for three months — through the end of September, as Biden will call for — will cost about $10 billion, the White House said.

When asked if Biden believes Congress can somehow mandate that oil companies pass on those savings, in full, to consumers, a senior administration official did not directly say but noted there is “some evidence that state tax suspensions, in particular, do get passed through to consumers.” Biden is scheduled to deliver remarks at the White House complex at 3 p.m. ET Wednesday.

The official, in a Tuesday evening call with reporters, said “the president is absolutely calling on companies to make sure that those savings are passed through to consumers.”

The administration is also putting public pressure on oil companies to help Americans at a time of financial need.

“Companies, of course, are beholden to their shareholders, but they really need to be beholden and conscious of customers, and their fellow neighbors, and their fellow citizens, just like this administration’s doing,” another senior administration official told reporters. “And we hope that that’s the spirit that CEOs of these companies will take.”

U.S. Energy Secretary Jennifer Granholm is scheduled to meet with oil refining executives Thursday.

On Wednesday, Biden will also call on state and local governments to provide “relief” to Americans by suspending their state gas taxes or provide other remedies, like delaying planned tax and fee increases, or even consumer rebates or relief payments, according to the White House. An official said Biden wants states to “match” what the federal government would be doing in the short term.

State gas taxes average about 31 cents per gallon of gasoline, according to the U.S. Energy Information Administration.

Researchers at the University of Pennsylvania’s Wharton School recently found that the suspension of gas taxes in Maryland, Georgia and Connecticut were, in fact, “mostly passed onto consumers at some point during the tax holiday in the form of lower gas prices,” but that the lower prices “were often not sustained during the entire holiday.”

In Maryland, 72% of the tax savings were passed on to consumers; in Georgia, 58-65% were, and in Connecticut, 71-87% were, according to their analysis.

A federal gas tax holiday “isn’t going to solve the whole problem,” the official said. “It is something that can be done to take a real step to relieve some of that pain at the pump. And we see it as part of a suite of policies that are designed to provide that relief, including policies that focus on the supply side.”

When asked why Biden wants the federal tax suspended for three months specifically, the official said the president wanted to balance the need of “the unique moment that we’re in” — particularly during the summer driving season — with the fact that the tax provides important revenue for the government to pay for highways and other transportation projects.

“The purpose of this suspension,” the official said, “is really to address the unique moment that we’re in, and with a particular focus on the summer driving season and the pain that families are feeling at the pump right now, while recognizing that on a longer-term basis, the gas tax is an important source of revenue for federal infrastructure.”

The gas tax revenue goes to the federal government’s Highway Trust Fund, which provides for much of the government’s spending on highways and mass transit. Biden believes Congress can fill in that roughly $10 billion gap with “other revenues,” an official said.

When asked if that money would come from last year’s $1.2 trillion infrastructure law, to which Biden signaled openness Tuesday, the official wouldn’t say but did note that there were proposals in Congress that would cover the revenue shortfall.

The official said the administration was “encouraged by the fact” that members of the House and Senate have already made similar proposals to what Biden will call for on Wednesday, but suggested the White House had yet to engage in depth with members of Congress on this topic — saying “we expect to” engage with Congress.

The official also said that all of the policies Biden is proposing — from gas tax holidays to pressuring oil refiners to expand capacity — could, combined, save consumers up to $1 per gallon or more. But that assumption is predicated on steps oil retailer and refiners have yet to show a willingness to take.

“President Biden understands that a gas tax holiday alone will not, on its own, relieve the run up in costs that we’ve seen,” the White House said in a statement. “But the President believes that at this unique moment when the war in Ukraine is imposing costs on American families, Congress should do what it can to provide working families breathing room.”

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