Will a gas tax holiday drive retail in the right direction? – RetailWire

Jun 29, 2022

President Joe Biden is proposing a moratorium on the federal gas tax in hopes of saving cash strapped consumers from having to pay so much at the pump.

The three month tax holiday President Biden proposed to Congress would allow drivers to save 18.4 cents per gallon (24 cents per gallon for diesel), according to Sourcing JournalPresident Biden has also called upon states to curtail their individual surcharges for the summer. State surcharges on gas average between 30 and 35 cents. Analysts say that every cent added or removed from gas prices impacts consumer spending $ 1.28 billion, in either direction, over a single year.

Rising fuel costs hit the consumer pocketbook not just at the pump, but in the aisle as CNBC reported in May. Higher fuel costs led to increased operational expenditures for logistics companies, which end up getting passed along to customers in the form of price increases.

Target CEO Brian Cornell said that the industry was caught off guard by the increased shipping and freight costs. Russia’s invasion of Ukraine drove gas prices, in part, to hit an all-time high in the US

As fuel prices were beginning to spike earlier this year, some retailers took it upon themselves to try to ease the strain on customers with fuel-related promotions. In April, Krispy Kreme pegged the price of a dozen donuts to the cost of a gallon of gas, rather than the normal range of about $ 11 to $ 20. Bojangles announced a give away of $ 1 million in free gas in the form of $ 10 gift cards accompanying certain purchases. And Dunkin’offered 30 cents per gallon off gas for Shell Fuel Rewards loyalty members who purchased their fifth drink.

Fuel prices have begun to come down in recent weeks. CBS News Reported on June 28 that gas prices had fallen for two weeks in a row, with prices down nine cents week-over-week due to falling oil prices. Experts anticipate a third weekly price drop, but caution that any additional supply disruption can drive prices. back up.

DISCUSSION QUESTIONS: Would a 90-day gas tax holiday remedy some or any of the supply chain issues and costs currently impacting retailers? How do you see retailers managing rising fuel costs in the long run should they continue to go higher?


“This generous gesture will stimulate short-term spending, yet it won’t solve complex supply chain issues. Rising labor and logistics costs and low availability will persist.”


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