Biden waives ethanol rule to lower gas prices

MENLO, Iowa (AP) — With inflation at a 40-year high, President Joe Biden took a modest step into corn-rich Iowa on Tuesday to cut gas prices by about a cent per gallon at a limited number of stations lower Rules to limit the blending of ethanol.

His announcement reflects Biden’s way of using almost every weapon in his bureaucratic arsenal to ease price pressures, yet the impact seems small and uncertain. Inflation has only accelerated in recent months, rather than fading as Biden once promised after the coronavirus recession rebounded after last year’s $1.9 trillion stimulus package.

Tuesday’s government report that consumer prices rose 8.5% year on year in March — the worst reading since December 1981 — only deepened Biden’s challenge to defend the Democrats ahead of this year’s midterm elections. More than half of the increase can be attributed to higher gas prices, which have skyrocketed in part because of the Russian war in Ukraine, but the cost of housing, groceries and other items have also skyrocketed.

Most gasoline sold in the US is blended with 10% ethanol, a biofuel that is currently cheaper than gasoline. Biden announced the Environmental Protection Agency will issue an emergency waiver to allow the widespread sale of a 15 percent blend of ethanol, which is normally banned between June 1 and September 15 amid fears it could be used at high temperatures contributes to smog.

Senior Biden administration officials said the promotion will save drivers an average of 10 cents a gallon based on current prices, but at just 2,300 stations out of more than 100,000 in the country. The affected stations are primarily in the Midwest and South, including Texas, according to industry associations.

Administration officials said the EPA has determined that the “emergency” move to allow more E15 gasoline sales for the summer is unlikely to have a significant impact on air quality. And that’s despite the fact that some environmentalists have long argued that more ethanol in gasoline increases pollution, especially in the warmer summer months.

Biden announced the move at a biofuel company in Menlo, west of Des Moines. Iowa is the country’s largest producer of corn, key to the production of ethanol.

The waiver is another attempt to ease global energy markets, which have been shaken since Russia invaded Ukraine. Last month, the President announced that the US would release 1 million barrels of oil per day from the country’s strategic petroleum reserves over the next six months. His administration said it helped bring gas prices down slightly lately after they rose 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 the AAA .

“Not only is this decision a major win for American drivers and our country’s energy security, it also means cleaner options at the pump and a stronger rural economy,” said Emily Skor, CEO of biofuel trade association Growth Energy, in a statement.

Congressmen from both parties had also called on Biden to grant the E15 waiver.

“Home-grown Iowa biofuels offer a quick and clean solution to driving prices down at the pump, and boosting production would help us become energy independent again,” said Republican Iowa Senator 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 E15 sales year-round.

The trip will be Biden’s first as president to Iowa, where his 2020 presidential campaign limped to fourth place in the state’s caucus. He will arrive with falling approval ratings and high inflation, while his party faces the prospect of huge midterm election losses that could cost them control of Congress.

The president also planned to boost his economic plans to help rural families and highlight the bipartisan $1 trillion infrastructure bill enacted last fall. This law provides funds for improving Internet access, upgrading sewage systems, reducing the risk of flooding, and improving roads and bridges, drinking water and electricity networks in sparsely populated areas.

Biden had hoped Democrats could walk with the low 3.6% unemployment rate and an agenda aimed at strengthening the middle class, but inflation has hijacked those ambitions and given Republicans a target for criticism.

Iowa Republican Party leader Jeff Kauffman has been ruthless in his criticism of Biden’s handling of the economy and inflation. But the temporary switch to ethanol was the right thing to do.

“First of all, I want to say that this is a good thing. Absolutely good thing. It would have been nice if he had done it sooner,” Kauffman said. “Am I happy about this waiver? Yes, I am. Is that enough? nope.”

High inflation also poses a threat to Biden’s broader domestic policy agenda, which likely depends on the vote of West Virginia Democratic Senator Joe Manchin. Manchin released a statement saying the Biden administration and the Federal Reserve had failed “to act quickly enough” to contain costs to the American people and that the problem of high prices was resolved before the invasion of the United States Ukraine lie.

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. It remains unclear what impact the new inflation data will have on these 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 oil refiners has blasted Biden’s decision, saying the only emergency is his drop in poll numbers.

“We agree with the administration on relieving consumers at the pump, but an illegal executive order won’t solve the problem,” said Chet Thompson, president and CEO of American Fuel & Petrochemical Manufacturers.


Josh Boak and Matthew Daly reported from Washington. AP writers Tom Beaumont in Des Moines and Farnoush Amiri in Washington contributed.

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