• The U.S. government's potential suspension of the gasoline tax suggests officials don't foresee a swift deal with Iran to end the war, according to Barbara Lambrecht from Commerzbank.
  • President Trump backs suspending the federal tax until it's appropriate, arguing prices will fall sharply once the conflict winds down.
  • However, the relief would be limited, as the federal gas tax accounts for only 18.4 cents per gallon, while the average price is nearly $4.50.

Doubts Over Iran Deal Fuel Tax Proposal

The White House's consideration of a federal gasoline tax holiday signals growing pessimism about a quick resolution to the Iran conflict. "For U.S. consumers, however, this does not provide much relief, as a gallon of gasoline currently costs nearly $4.50 in the U.S., and only 18.4 cents of that is the gasoline tax," said Barbara Lambrecht, a commodities analyst at Commerzbank. According to AAA, the average nationwide cost of a gallon of regular unleaded gasoline was $3.14 a year ago.

President Donald Trump expressed support for suspending the 18.4 cents per gallon federal tax "until it's appropriate," predicting that prices would drop sharply once the war ends. But the proposal faces congressional hurdles and would require offsetting funds for highway and transit programs, which rely on gas tax revenue. "Without a deal, the administration may be forced to act unilaterally, but the impact would be minimal," a person familiar with the matter said.

Limited Relief for Consumers

Even if enacted, a temporary pause would save a typical driver only about $2.20 per 12-gallon fill-up. The broader price surge stems from crude oil costs and refining margins, which remain elevated amid ongoing hostilities. States like New York and California have already implemented their own tax holidays, but those too have provided modest savings. "The real issue is not the tax; it's the war," said an industry analyst who declined to be named. Efforts to reach the White House for comment on timing were unsuccessful.

Correction: An earlier version of this article misstated the average gas price a year ago; the correct figure is $3.14 per gallon.