WashingtonUS pump prices rose 52% since late February.
Senator Hawley introduced a bill to pause the 18.4¢/gallon tax — revenue that funds highway and bridge infrastructure — as Iran war closed the Strait of Hormuz for 2 months.
Analysts say a 3-month pause would cost $7 billion in road funds; Trump said ceasefire talks are on “life support.”
Sources: CBS News, Financial Times News, Al Jazeera Online
THE TAX THAT BUILT THE INTERSTATES
The federal gasoline tax was created in 1932 as a Depression-era revenue measure, then rededicated in 1956 to fund the Interstate Highway System. Eisenhower's bargain was simple: drivers pay at the pump, the receipts go into a dedicated Highway Trust Fund, and Congress cannot raid it for general spending.
FROZEN SINCE CLINTON
The 18.4¢ rate has not been raised since 1993. Inflation has eroded its real value by more than half, while construction costs have roughly tripled. The Trust Fund has required general-fund bailouts every year since 2008 just to stay solvent — a gas-tax pause accelerates a shortfall that already exists.
WHY FUEL IS THE PERFECT TAX
Demand for fuel is inelastic — drivers buy roughly the same amount whether prices rise or fall in the short run. That makes the tax cheap to collect (a few hundred refineries and terminals, not millions of taxpayers) and nearly impossible to evade. Suspending it is the political opposite: highly visible at the pump, instantly popular, and structurally hard to reverse.
THE PASS-THROUGH PROBLEM
Economists who studied state-level gas-tax holidays — Maryland and Georgia in 2022, Florida's August 2022 pause — found only 58–87% of the cut reached consumers. The rest was captured by refiners and retailers as margin. A federal pause during a supply shock, when refiners already enjoy fat crack spreads, tends toward the low end of that range.
THE REFINERY BOTTLENECK
America has not built a new major refinery since 1977. Existing refineries run at 90%+ utilization. When a chokepoint event like Hormuz removes crude, US gasoline prices spike not because of the tax but because refining capacity cannot flex. Cutting the excise treats a symptom; the constraint is industrial.
THE HORMUZ TRANSMISSION
Roughly a fifth of global oil consumption transits the Strait of Hormuz. The US imports relatively little Gulf crude directly, but oil is a fungible global commodity — a barrel removed from the Asian market bids up the Atlantic barrel that would otherwise have gone there. The pump price in Missouri tracks Brent, not Texas wellheads.