Gas prices in the U.S. hit their all-time highs in March. While prices have since come down, they're still up considerably over the last year. Between 2020 and 2021, eligible Americans got three stimulus checks as the government tried to support the economy. Now, many people are hoping for gas stimulus checks in 2022.
If you're expecting a gas stimulus check in 2022, you might be disappointed. Will gas stimulus checks actually arrive?
The Gas Rebate Act of 2022 intends to offer financial relief.
In March, House representatives Mike Thompson (D-CA), Lauren Underwood (D-IL), and John Larson (D-CT), and introduced the Gas Rebate Act of 2022. The Act proposes a $100 monthly rebate check every month if the national average gas price is more than $4 per gallon. The stimulus check would rise by $100 for every dependent.
How are gas prices determined in the U.S.?
First, let's understand the dynamics of gas prices in the U.S. Global crude oil prices are the key driver of the gas price that you pay at the pump. However, apart from this, we have refiner and retailer margins. Then there are federal and state taxes.
A few states have temporarily suspended the gas tax in a bid to provide relief to gas buyers. There have been calls to suspend the federal gas tax also but the Biden administration isn't keen given its negative impact on the already strained fiscal position.
Gas prices might come down in 2022.
For U.S. gas prices to come down, either the crude oil prices have to drop or margins for refiners and fuel retailers have to be cut. Otherwise, governments have to suspend the gas taxes.
Global crude oil prices have started to come down and are now back below $100 per barrel. Crude oil prices might come down more from these levels looking at the various developments. First, the demand outlook for crude oil has gotten worse amid the lockdowns in China.
Second, on the supply side, Russia continues to export oil and gas. While some countries have shunned Russian oil, the country has been able to find new buyers. For example, India has scaled up its oil purchases from Russia because it was offered a massive discount.
Finally, the Biden administration’s decision to gradually release 180 million barrels of oil from the strategic oil reserves will help bring down prices.
Crude oil prices might fall more in the second half of 2022.
Crude oil prices might fall more in the second half of 2022. The yield curve has already flashed a recession warning and the Fed’s rate hikes might have a negative impact on U.S. economic growth. Slowing global growth could dampen the crude oil demand in the coming months, which could lead to lower crude oil prices.
You might not get a gas stimulus check in 2022.
If crude oil prices continue their downwards trajectory, average gas prices in the U.S. might drop below $4 per gallon. This would mean that the gas stimulus checks might not arrive even if Congress passes the Gas Rebate Act of 2022. Most consumers won’t complain since they should be paying much lower prices for gas as 2022 progresses.