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The Energy Stimulus

As the final round of covid stimulus finished, people thought that now there would not be any more stimulus checks for some time. But they are wrong to think that as many countries announce the new round of stimulus called energy one time pay off.


Thanks to the price squeeze on oil and other energy products due to higher demand and geopolitical issues among many reasons that are causing consumers to pay thirty to fifty percent higher energy bills. This has caused many governments into action mode again as many of them will be conducting elections soon.


The main issue is not that payments are to help energy bills but the main problem is the availability of enough fuel to go around. In Europe, many countries are facing diesel shortage as it was imported from Russia. And on top of that, Russia is making rouble payments compulsory for gas supplied to certain countries. EU and G7 block has already refused to do so and this might result in another set of price shocks in April.


These high price levels have disturbed many medium and small businesses throughout the world, as they have to pay it from their margins that are already getting squeezed. Even transporters are facing the same issues with the unavailability of diesel that has reduced operating capacity at its lowest since covid leading to further hampering of supply chains.


Thus, stimulus checks will not solve but might enhance inflation as they increase the saving rate in short term and might also get spent on other consumptions rather than the fuel.


European Union and the USA had said that the availability of fuel might now be the problem but the price of it will be an issue. But as the days go by and reports are read through both are becoming a widespread issue. This would result in large-scale closures and bankruptcies resulting in a financial crisis by the fall of 2022.



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