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FINANCIAL NEWS

Gas prices: will the Biden administration send households gas rebate cards?

The high price of gasoline is causing major issues for motorists, so will the White House send out pre-paid fuel cards to help struggling Americans?

Update:
Renewed calls for gas rebate cards for motorists
BloombergGetty

For months the prospect of a gas rebate card has been mooted in Washington to provide financial relief for households struggling to afford the rising cost of motor fuel. Last week the average price of gasoline reached $5 per gallon for the first time in the United States and experts predict it could rise far higher.

However CNN report that a White House official has confirmed that the Biden administration is unlikely to advocate for gas rebate cards. Not only would the process be difficult to administrate but he would need Congressional approval to send out the cards. This is unlikely to be forthcoming.

Technical issues make gas rebate cards very unlikely

On Friday The Washington Post had claimed that President Biden was considering sending out cards to millions of drivers, having previously ruled out the idea. Their scepticism for the idea was fuelled in part by uncertainty about how the program could be organised.

The idea was to send out pre-loaded cards to recipients, but in practice there would be no way to control what people spent the money. This would essentially mean that the payments were just another stimulus check, something that Congress would be incredibly weary of with inflation as high as it is currently.

Another concern was the availability of materials needed to produce the cards themselves. Shortages in the US chip industry could make it a very expensive and time-consuming form of support.

Would gas rebate cards actually help motorists?

The high price of gasoline is causing major headaches for Biden, both economically and politically. With the midterm elections coming up in November he is under real pressure to bring about economic relief for Americans as his polling numbers continue to suffer.

But would a simple cash injection for motorists really solve the problem anyway? Perhaps not.

At the heart of the high price of gasoline is a simple supply-demand issue: sanctions on Russia-produced oil and supply chain problems have strangled the amount of crude oil available in the US, and therefore reduced the amount of gasoline that can be produced.

Giving more motorists would, in effect, only serve to increase the demand with more cash in the pockets of consumers. Increasing demand without addressing the supply issues would only push up prices further.

Andy Lipow, president of consulting firm Lipow Oil Associates, explains: “Providing rebates cards to Americans eases the pain at the pump but does nothing to increase gasoline supplies, which would have a far greater impact.”

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