gas price explainer
Three reasons gas prices are expected to stay high
02:44 - Source: CNN Business
CNN  — 

The Biden administration is unlikely to advocate for sending households gas rebate cards as officials continue to weigh all options to ease the pain at the pump, an official familiar with the matter tells CNN.

Gas cards could be popular with families grappling with surging prices at the pump. The Washington Post reported on Friday that Biden officials are taking a second look at whether the administration can send out rebate cards to help drivers pay for fuel at gas stations.

However, this is unlikely to happen in part because it would be difficult to administer and there would be no way to ensure the cards are only used for gas, the official said. Moreover, Congress would need to approve funding for such an emergency move and that would be challenging.

In March, the White House said that gas cards were not seriously under consideration because of execution and fraud concerns. A source familiar with the administration’s thinking at the time told CNN that one concern is that in the past cards have been stolen from mailboxes.

Record-high gas prices are causing major political and economic problems for President Joe Biden, prompting the White House to scramble for solutions and demonstrate his concern about the matter. Gas prices have only gone higher since March, with the national average surging beyond $5 a gallon in recent days for the first time ever. This has contributed to the highest inflation in the United States in more than 40 years.

But gas cards would not solve the underlying supply-demand problem at the heart of record-high gas prices. Instead, they could artificially boost demand at a time when some analysts have warned demand needs to cool off to meet supply.

“This is one of the most dangerous ideas because it’s the most likely to immediately spike demand at a time that we’re most vulnerable to any supply disruptions,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. He added that gas cards could even induce disruptions by “giving Americans a reason to consume more fuel.”

“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,” said Andy Lipow, president of consulting firm Lipow Oil Associates.

Lipow said a simpler and quicker step to lowering prices would be suspending the federal excise tax of 18 cents per gallon. “No rebate card or microchip required,” he said.