Biden eases ethanol restrictions in hopes of taming US fuel prices

The Biden administration is temporarily lifting seasonal restrictions on the sale of higher blends of ethanol in petrol, in the White House’s latest effort to drive down prices at the pump.

President Joe Biden will announce during a trip to Iowa on Tuesday that the Environmental Protection Agency will issue a national emergency waiver to allow E15 gasoline — petrol containing up to 15 per cent ethanol, higher than the standard 10 per cent — to be sold across the US this summer.

Senior administration officials said that at current prices, using E15 could save motorists 10 cents a gallon on average.

Ethanol, typically made from corn, is a renewable source of fuel that can be blended with gasoline, reducing the volume of oil required. But burning high blends of ethanol in hotter summer weather can cause smog, which led the EPA in 2011 to ban E15 sales between June 1 and September 15.

Data on Tuesday showed inflation accelerated last month as US consumer prices surged 8.5 per cent year-on-year due to a rise in energy and food prices following Russia’s invasion of Ukraine.

Average petrol prices hit record levels above $4.30 a gallon last month as the Ukraine invasion drove fears of crude shortages. On Monday, the national average was about $4.11 a gallon, according to the AAA, a motoring group, down slightly from recent highs but more than 70 per cent higher than when Biden took office last year.

Amid a challenging domestic political landscape and with crucial midterm elections on the horizon, the White House has sought to place the blame for higher consumer costs on Russian president Vladimir Putin, repeatedly referring to the rise in inflation as “Putin’s price hike”.

“The president . . . is trying to use all tools at his disposal to address the price increase resulting from Putin’s further invasion in Ukraine,” a senior administration official said, pointing to the administration’s move last month to announce the release of a record 180mn barrels of oil from the US emergency stockpiles over a six-month period.

It was the third time since November that the president had dipped into the Strategic Petroleum Reserve in a bid to tame prices.

Biden has also asked US oil producers to raise output and leaned on allies in the Gulf to pump more, although neither move has borne fruit.

About 2,300 fuel stations across 30 states sell E15, according to the US energy department, a fraction of the roughly 150,000 stations nationwide.

The administration of then-president Donald Trump removed the seasonal restrictions in 2019, but a court struck that down. A senior Biden administration official said they were confident the latest move would not face legal challenges, explaining: “The approach, process and specific authority are different here.”

Administration officials said the EPA would work with states to “ensure there are no significant air quality impacts through the summer driving season”. The agency’s analysis suggested the emergency waiver was “not likely to have significant impacts on the ground” given E15 is more readily available in the Midwest, rather than large coastal cities where smog is more prevalent.

The ethanol industry and politicians from agriculture-reliant states have piled pressure on the Biden administration to lift the restrictions. Last month, a group of senators including Republican Chuck Grassley of Iowa — the country’s biggest corn- and ethanol-producing state — urged Biden to reconsider. Senior administration officials said the EPA was weighing additional steps to increase the availability of E15.

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