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Charles is a writer for Oilprice.com

U.S. gasoline prices have jumped roughly 50% since the Iran conflict escalated, dragging consumer sentiment to its lowest level since 1952 as Americans face mounting energy and inflation pressures.

The Trump administration is considering a temporary removal of the federal gas tax in response to soaring retail fuel prices that have dampened consumer sentiment, sending it to its lowest since the early 1950s.

“I think it's a great idea,” the President told CBS News in an interview Monday. “Yup, we're going to take off the gas tax for a period of time, and when gas goes down, we'll let it phase back in.”

The remarks of the President echo a suggestion by Energy Secretary Chris Wright made on Sunday, about the administration being open to all ideas for lowering prices at the pump. “All measures that can be taken to lower the price at the pump and lower the prices for Americans, this administration is in support of,” Wright told NBC’s “Meet the Press”, adding that “We’re open to all ideas,” but noting that “Everything has trade-offs.”

The federal tax on gasoline stands at $0.184 per gallon, with the tax on diesel fuel at $0.244 per gallon. The gas tax has not been increased since the early 1990s. The revenue collected via this tax is used for road construction and repairs.

Fuel prices have gone up by 50% since the United States and Israel launched the first missile attacks on Iran that prompted Tehran’s retaliatory move of closing the Strait of Hormuz, which handles about a fifth of global energy commodity flows. Close to three months into the war, the world is feeling the pinch of oil and gas supply tightness with increasing pain.

Related: Asia’s Major LNG Importers Japan and Korea Turn to Coal

In the U.S., the latest consumer sentiment reading from the University of Michigan survey showed the lowest number since 1952, at 48.2. The institution’s director of surveys, Joanne Hsu, remarked that “About one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs. Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump. Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall.”

This seems to be the prevailing perception among analysts and other observers. Until tankers remain stuck in the Strait of Hormuz, energy prices are going to continue hurting economies, including the world’s largest oil and gas producer and a top-three exporter.

The last time a federal gas price holiday was discussed was in 2022, when prices again surged after the EU, the UK, and the United States slapped sanctions on Russia’s energy industry in response to the incursion into Ukraine earlier in the year. However, at the time, Congress opposed the move, and the holiday never materialized. This time, there are Republican lawmakers in favor of such a move, and two of them have already submitted bills to that effect.

“American families need this relief on gas prices. My office will be working directly with President Trump to ensure we deliver this win for the American people,” Rep. Anna Paulina Luna said on social media on Monday, where she also announced she would be “introducing a bill in the House to suspend the federal gas tax in light of Trump’s recent remarks.” Senator Josh Hawley will also introduce a bill to suspend the federal gas tax, he said on X.

Not everyone is convinced that removing the gas tax for a while would help much with bills. At the current rate, the tax is unlikely to make much of a difference, especially if international oil prices continue to climb as the United States and Iran remain stuck in what appears to be a stalemate, with both sides unwilling to make any concessions.

By Charles Kennedy for Oilprice.com

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