Biden Waiving Ethanol Rule in Bid to Lower Gasoline Prices
President Joe Biden is visiting corn-rich Iowa on Tuesday to announce he’ll suspend a federal rule and allow the sale of higher-ethanol gasoline this summer, trying to tamp down prices at the pump that have spiked during Russia’s war in Ukraine.
Most gasoline sold in the U.S. is blended with 10% ethanol. The Environmental Protection Agency will issue an emergency waiver to allow widespread sale of a 15% ethanol blend that is usually prohibited between June 1 and Sept. 15 because of concerns that it adds to smog in high temperatures.
Political Pressure Over Inflation
Senior Biden administration officials said the action will save drivers an average of 10 cents per gallon, but at just 2,300 gas stations. Those stations are mostly in the Midwest and the South, including Texas, according to industry groups.
Biden is facing growing political pressure over inflation, and new data Tuesday showed prices rising at the fastest pace in more than 40 years, driven in part by soaring energy costs during the Russia-Ukraine war. The Labor Department said its consumer price index jumped 8.5% in March from 12 months earlier, the biggest year-over-year increase since December 1981.
Gas prices accounted for more than half of the monthly jump, and food and housing costs also climbed in ways that could weigh on families. Inflation began to accelerate last year amid robust hiring after the passage of Biden’s $1.9 trillion coronavirus relief package, a challenge for U.S. consumers that Russia’s invasion of Ukraine then amplified.
Administration officials said the EPA has determined that the “emergency” step of allowing more E15 gasoline sales for the summer is not likely to have a significant air quality impact. That’s despite some environmentalists long arguing that more ethanol in gasoline increases pollution, especially during warmer summer months.
Biden was announcing the move at a biofuel company in Menlo, west of Des Moines. Iowa is the country’s largest producer of corn, key to producing ethanol.
The waiver is another effort to help ease global energy markets that have been rocked since Russia invaded Ukraine. Last month, the president announced the U.S. will release 1 million barrels of oil per day from the nation’s strategic petroleum reserve over the next six months. His administration said that has helped to slightly reduce gas prices lately, after they climbed to an average of about $4.23 a gallon by the end of March, compared with $2.87 at the same time a year ago, according to AAA.
“Not only is this decision a major win for American drivers and our nation’s energy security, it means cleaner options at the pump and a stronger rural economy,” Emily Skor, CEO of the biofuel trade association group Growth Energy, said in a statement.
Members of Congress from both parties also had urged Biden to grant the E15 waiver.
“Homegrown Iowa biofuels provide a quick and clean solution for lowering prices at the pump, and bolstering production would help us become energy independent once again,″ said Iowa Republican Sen. Chuck Grassley. He was among nine Republican and seven Democratic senators from Midwestern states who sent Biden a letter last month urging him to allow year-round E15 sales.
The trip will be Biden’s first as president to Iowa, where his 2020 presidential campaign limped to a fourth-place finish in the state’s caucus.
After bouncing back to win the Democratic nomination, Biden returned for a rally at the Iowa state fairgrounds four days before Election Day 2020, only to see Donald Trump win the state by 8 percentage points.
Biden’s Sagging Approval Ratings
Biden heads back to the state at a moment when he’s facing yet more political peril. He’s saddled with sagging approval ratings and inflation at a 40-year high while his party faces the prospect of big midterm election losses that could cost it control of Congress.
The president also planned to promote his economic plans to help rural families and highlight the $1 trillion bipartisan infrastructure law enacted last fall. That law includes money to improve internet access, as well as for modernizing wastewater systems, reducing flooding threats and improving roads and bridges, drinking water and electric grids in sparsely populated areas.
“Part of it is showing up in communities of all sizes, regardless of the results of the last election,” said Jesse Harris, who was a senior adviser to Biden’s 2020 campaign in Iowa and directed early voting efforts for Barack Obama’s campaign in 2008.
Administration officials have long suggested that Biden travel more to promote an economy that is rebounding from the setbacks of the coronavirus pandemic.
But much of the positive jobs news nationally has been overshadowed by surging gas, food and housing prices that have offset wage gains.
Iowa Republican Party Chairman Jeff Kauffman was unsparing in his criticism of Biden’s handling of the economy and inflation. But, he said, the temporary move on ethanol was the right one.
“First of all, let me say that that’s a good thing. Absolutely good thing. It would have been nice had he done it earlier,” Kauffman said. “Am I glad about this waiver? Yes I am. Is it enough? Nope.”
Oil Industry Blasts Move
The high inflation also poses a threat to Biden’s broader domestic agenda, which the White House hoped would draw a contrast with Republicans in the upcoming midterm elections. Democratic Sen. Joe Manchin of West Virginia released a statement saying that the Biden administration and the Federal Reserve failed “to act fast enough,” to curb costs for the American people and that the problem of high prices predates the invasion of Ukraine.
“It is a disservice to the American people to act as if inflation is a new phenomenon,” Manchin said in a release.
Manchin, whose opposition doomed Biden’s 10-year, roughly $2 trillion measure in December, had recently returned to the negotiating table with the White House. Manchin has said that any new package must include provisions for deficit reduction and controlling inflation. It remains unclear what impact the new inflation data will have on the status of those negotiations.
After Iowa, Biden will visit Greensboro, North Carolina, on Thursday.
The EPA has lifted seasonal restrictions on E15 in the past, including after Hurricane Harvey in 2017. The Trump administration did so in the summer two years later but had that action struck down by a federal appeals court.
A group representing petroleum refiners blasted Biden’s decision, saying the only emergency was his dropping poll numbers.
“We are right there with the administration on wanting to see relief for consumers at the pump, but an unlawful executive order is not how to solve the problem,” said Chet Thompson, president & CEO of the American Fuel & Petrochemical Manufacturers.