With the unprecedented economic disruption caused by the Covid-19 pandemic, households around the world have faced financial strain including skyrocketing gas prices. A spate of record-breaking gas hikes this summer has led to households having to dig deeper into their pockets just to fill up a tank, and at times leading to families having to choose between an outing, errands, or even food. In light of these challenges, many countries have been working to find ways to provide relief to their citizens. In the US, a new proposal has been made that would allow for households to receive up to $300 a month in additional funds to help them cope with the expense of gas.
Understanding the Proposal
The proposal, which was first put forward by Senator Edward Markey (D-MA), is titled the Low Income Coronavirus Relief Act (LICRA). It would provide an automatic debit card to eligible households in the country that would include up to $300 each month in gas subsidies. Those households, who would be identified by the results of the 2020 Poverty Level Measurement report on poverty, would be selected to receive this debit card. The proposal was introduced as an amendment to the Heroes Act, a bill that seeks to provide additional economic relief to the US during the Covid-19 pandemic. The heroes act would provide an overall package of around $3 trillion.
Criteria To Receive this Relief
As the bill has not officially been passed yet, the criteria for which households would qualify for the gas subsidy has not been finalized. However, according to the bill’s text, households that fall in poverty level measurements for the 2020 calendar year would be eligible for this relief. This would include households making up to 50% of the median US household income in their respective state. In addition, any household earning up to the poverty level threshold of the US Department of Housing and Urban Development would also be eligible for the relief package. The bill stipulates that the relief would only be available for those households that make up to the qualifying criteria.
Foes of the Bill
Not surprisingly, the proposal has met with opposition from a number of Senate Republicans who see this as an additional burden to the federal budget. They argue that providing relief to low-income households through fuel subsidies could put unnecessary strain on the federal budget. This argument is compounded by the fact that the $3 trillion proposed in the Heroes Act is seen by the Republicans as being way too excessive.
Further Cost Concerns
In addition, those opposing the bill worry that providing subsidies to households could drive up demand and thereby drive up the cost of fuel, especially if households were able to use the full $300 each month towards fuel purchases. However, these worries could be unfounded since it is likely that additional relief would have to be provided to help households pay for fuel in the short-term, but in the long-term fuel prices would likely remain at these elevated levels. This means that households would still benefit from having to pay less in the long run.
Social Benefits of the Package
In addition to providing relief to those most affected by gas price hikes, the proposed relief package could also have wider social benefits. By focusing on providing relief to low-income households, the package could help reduce income inequality in the country. In addition, the stimulus package could help stimulate the domestic economy by providing people with additional money to spend on other goods and services.
International Precedent
The proposed relief package is not an entirely new concept. In fact, a number of countries have already implemented similar relief programs, with varying levels of success. For example, in Russia, the government has implemented gas subsidies for households as well as state-sponsored fuel cards. This program has managed to keep gas prices at a more affordable level for Russian households. In addition, in the United Kingdom, the government has provided relief funds for households that are struggling with fuel costs. While the UK’s relief program is not as substantial as the one proposed by LICRA, it is nonetheless a step in the right direction when it comes to providing relief to those affected by gas prices.
Final Thought
Gas prices are a significant source of financial strain for many households across the country. The proposed relief package could provide much needed relief and help those households cope with the rising prices. This, in turn, could have wider social benefits and help reduce income inequality. While there are those who oppose the proposal and worry about the additional costs it could pose to the federal budget, ultimately the focus should remain on providing relief to those who need it most.
In conclusion, the LICRA proposal could be a step forward in providing household relief during the Covid-19 pandemic. It would help those households struggling with rising gas prices, and it could go a long way in helping to reduce income inequality. This proposal could be a welcome development for those households in the country who have been hardest hit by the pandemic and have been unable to cope with the high cost of fuel.
