Proposed Gas Rebate Cards Complicated by Chip Shortages

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As the White House considers approaches to take the edge off of sky-high gas prices across the country, gas rebate cards are being discussed anew. However, the idea has some obstacles, including that the cards may not be possible due to the international chip shortages.

Gas rebate cards would, in theory, provide direct, temporary relief for millions of Americans. The cards would be issued with pre-loaded credits, $100 for each driver per month, with an extra $100 for every dependent in the household. The cards would be reloaded each month of 2022 as long as the average gas price stays above $4 a gallon, Marca reports.

It is unclear how much the gas rebate cards would cost the U.S.

The idea is similar to a gas tax relief strategy proposed in California. Governor Gavin Newsom suggested sending registered vehicle owners up to two $400 debit cards each, at a cost of about $9 billion, but was met with pushback over the plan leaving out those who do not own cars and being “counterproductive to climate goals.”

The governor instead approved over $9.5 billion in tax refunds for 23 million Californian taxpayers to offset the high gas prices.

Meanwhile, debate continues about whether or not gas rebate cards would even be possible; as semiconductor demand rises, factories across the United States are having trouble keeping up.

Intel CEO Pat Gelsinger stated that he believes the shortage will last until 2024. “The shortages have now hit equipment, and some of those factory ramps will be more challenged.”

Semiconductors are needed now in everything from appliances to vehicles and credit cards, making it expensive for the U.S. to manufacture millions of rebate cards.

Besides chip shortages, there is a concern about how the rebate program would be managed. Sources familiar with the administration’s plan told The Washington Post there is no way the White House could regulate how people used their pre-loaded gas cards.

Although rebates may seem like a good idea at face value, experts have warned that too much direct relief from the federal government could balloon inflation further by encouraging spending, much like the stimulus money disbursed during the pandemic did.

Some in the oil and gas industry agree the proposed solution is not realistic.

For Andy Lipow, president of Lipow Oil Associates, gas rebate cards are only a band-aid for a much larger problem.

“It doesn’t get any more supplies into the market…nor does it increase the amount of gasoline the refineries are making,” Lipow told The Dallas Express. “It encourages the consumer to maintain their existing buying habits … rather than trying to conserve.”

He stated that the same goes for the idea of federal gas tax holidays: They simply do not add any more supply to the market.

As reported by The Dallas Express, President Biden asked Congress to implement this form of temporary relief for three months, which would remove the 18.4-cent-per-gallon federal tax on unleaded fuel and the 24.4-cent tax on diesel. The president also urged governors to lower gas taxes in their respective states.

Other ideas being evaluated include invoking the Defense Production Act. First created in response to the Cold War, the Defense Production Act would allow for the president to take greater control over domestic industry.

The Defense Production Act moves more production into the U.S. and forces private companies to take orders from the federal government as the first priority, raising production.

At the individual level, Lipow suggested that consumers be the first ones to make a change in a world of rising prices. “The one thing the consumer has control over is their driving habits,” he said.

He recommends that people carpool at least once or twice a week, work from home if allowed, and run joint errands with friends.

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