"Gas out," "Gas out," "Gas Tax Holiday," and More: Will it Work?

"Gas out," "Gas out," "Gas Tax Holiday," and More: Will it Work? ...


Americans are attempting to alleviate rising gas prices by any means necessary. But will these efforts be enough? Or are they doomed to feel pain at the pump no matter their best efforts?

The return of the gas out movement

Anybody of you who have old enough to drive back in 1997, 2007, or 2012 may remember the gas out movement. Guess what: it''s back.

If you are new to this old boycott, it is as follows:

If your tank is running low, you must receive your gas the day before or the day after, according to an email or Facebook status.

They often refer to the April 1997 gas out movement, in which they allege gasoline prices dropped 30 cents per gallon overnight, before citing some statistics about how much they would lose after a day of collective boycotting.

The first clue to all grammatical errors should have been.

What''s the problem?

First, that is not how supply and demand work. Whether the nation fills up their tank on July 2nd, 3rd, 4th, or 5th, they''re still buying the same amount of gas.

Secondly, the fossil fuel industry is a powerful adversary, with a vast swath of companies employing billions of dollars to keep up with current pricing trends. If a movement is too wide to matter, it will not protect them.

If the movement was to sell our automobiles and begin riding our bicycles to work on July 3rd, then this would have some legs. Otherwise, our best advice:

Don''t cancel your 4th of July plans for a 25-year-old piece of chainmail.

If youre seeking a go-ahead from rising gas prices, there is something that might, at least temporarily, assist.

President Biden has urged the Congress to pass a three-month gas tax holiday.

President Biden formally asked Congress to take a three-month vacation on the federal gasoline tax, which might reduce up to 18 cents per gallon off the price youll pay at the pump this week.

This is not the first attempt by the Biden administration to lower oil and gas prices. Previously, he has tried:

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So far, nothing has changed the tide of rising prices. This gas tax holiday (quickly timed to take place right before the midterm elections) might be Biden''s first effective measure to help lower gas prices.

Aside from that, it''s not that simple.

A Temporary, Potentially Contraproductive Act

This isnt the first time that a gas tax holiday was considered (and shot down) in the United States in 2008. In 2008, gas prices were rising, and both Hillary Clinton and John McCain were supportive of the measure, which could have temporarily mitigated the increase in gas prices.

Obama, the former running partner of President Biden, calls the gas tax holiday a gimmick, pointing out that it might not address the problem, including a supply & demand imbalance, and that it might even aggrave the situation.

High prices are the best cure for old economic adage. Rather, the government would simply encourage consumers to continue spending money on gas at an all-time high, thus increasing demand.

According to Moodys Analytics'' chief economist, people need to drive less and consume less gas. This is an indication of this goal.

This means that even if Congress passes the proposed gas tax holiday, will only be a bandaid on a much larger concern centered around the current administration''s overall energy policy.

What Led Us Here in the First Place?

Despite the best efforts of those in power to rebrand the inflation facing American citizens as a result of Putin''s Price Increase, inflationary problems have brewing long before Russia''s invasion of Ukraine. This is something that Fed Chair Jerome Powell spoke about during his semi-annual congressional testimony.

Given how inflation has increased in the last 18 months, would you say that the Ukraine conflict is the primary driver of inflation in America? Powell responded,

No, inflation was high before, almost, the battle in Ukraine rained out.

Jon Najarian, the co-founder of Market Rebellion, recently dismissed the situation in a tweet form, complete with a labeled graphic.

In the tweet about Jons'' response, Pete Najarian said it at its finest, but I have no lean politically, although the facts are the truth. Look at the Crude Chart.

In a Jons tweet, the graph highlights Biden''s administration''s energy policy, which the President himself described as as "tough on big oil." Biden was even quoted as saying, "We are going to eliminate fossil fuels."

These policies were likely made with intentions in the hopes of combating climate change and involuntary a shift to renewable energy and instead of fossil fuels.

In November of last year, Secretary of Transportation Pete Buttigieg said that he encouraged Americans to purchase an electric vehicle so they would never have to worry about gas prices again. There is also quite a lot of overlap between individuals who are struggling to afford gas prices and those who can afford a $50,000+ electric vehicle.

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How to Trade the Energy Sector With Options

This is not about politics, it about the market. It''s about utilizing all of the facts before us to make a judgment about how to trade and invest in the current environment. If you ask Jon Najarian, the structural flaws that have fueled the energy industry in 2022 are still intact, indicating that it isn''t time to abandon the energy industry just yet.

Jon broke down a massive institutional options transaction that caught his attention in the oil and natural gas stock Cenovus Energy (CVE) - Get Cenovus Energy Inc Report one that he entered himself.

The Bottom Line: Whether Americans boycott gas on July 4th or Congress authorizes a federal tax holiday, nothing will have changed the narrative. While the Administration''s energy policy is still unfavorably tilted against fossil fuel producers, it''s unlikely that the United States will begin buying Russian energy again sometime soon.

Legacy energy companies like (XOM) - Get Exxon Mobil Corporation Report, (CVX) - Get Chevron Corporation Report, (VLO) - Get Valero Energy Corporation Report, and Cenovus (CVE) will likely continue to generate record profits in the face of a perfect inflationary storm that the Federal Reserve has said it has no way to combat.

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