Biden taps into ethanol to help lower fuel prices as consumer inflation rises

MENLO, Iowa (Reuters) – U.S. President Joe Biden on Tuesday unveiled plans to expand the availability of high biofuel blends of gasoline over the summer to curb soaring fuel prices and reduce dependence on against foreign energy sources.

The move, announced during a trip to an ethanol plant in Iowa, represents the administration’s latest attempt to rein in inflation, which hit a new 40-year high on Tuesday.

Biden’s poll numbers have faltered under the weight of rising consumer costs and inflation is seen as a major liability ahead of November’s midterm elections.

The decision represents a victory for the US corn lobby likely increasing demand for corn-based ethanol and a setback for oil refiners, who view ethanol as a competitor.

The measure will allow Americans to continue buying E15, a gasoline that uses a 15% blend of ethanol, from June 1 through September 15. While E15 costs just 10 cents less on average and is less “energy dense,” meaning drivers would have to buy more fuel, it should still help cut expenses, senior officials said. administration to reporters in a phone call Monday ahead of the announcement.

Only a few thousand U.S. gasoline retailers offer E15 at the pump, and they must turn pumps off during the summer season to comply with applicable law. Biden told the crowd in Iowa that would change this summer, if only temporarily.

“You’re not going to show up at your local gas station and see a bag above the pump that has the cheapest gasoline in it. You’re going to be able to keep filling up on E15,” Biden said.

He added that much more needs to be done to lower gasoline prices.

“It’s not going to solve all of our problems,” Biden said.

The decision comes after several weeks of internal White House debates that have pitted environmental advocates like Gina McCarthy against Agriculture Secretary Tom Vilsack, former Iowa governor, according to two sources familiar with the discussions.

The summer ban on E15 was imposed due to concerns that it contributes to smog in hot weather, although research has shown that the 15% blend may not increase smog compared to 10% blends most common sold all year round.

Russia’s invasion of Ukraine and subsequent sanctions and boycotts have pushed retail gasoline prices to record highs, a vulnerability for Biden’s fellow Democrats in November’s congressional elections.

“Your family budget, your ability to fill your tank, none of that should depend on a dictator declaring war and committing genocide on the other side of the world,” Biden said.

Biden announced last month that the United States would sell 180 million barrels of crude from the Strategic Petroleum Reserve at a rate of 1 million barrels per day starting in May, the largest outflow from the stock since its inception in the United States. 1970s.

CORN VS OIL

Biden made the E15 extension announcement during a visit to POET Bioprocessing, the largest US biofuels producer in the major corn producing state of Iowa.

“We commend President Biden and his administration for recognizing that low-cost, low-carbon ethanol should have a fair opportunity to bolster our energy security and reduce record prices at the pump,” the official said. president of the Renewable Fuels Association, Geoff Cooper.

Representatives of the oil industry criticized the administration’s decision.

“Americans are looking for long-term solutions, not short-term political solutions (to high gas prices),” said Ron Chittim, spokesman for the American Petroleum Institute, the industry’s top lobbying organization. petroleum.

To make the change, the Environmental Protection Agency (EPA) plans to issue a national emergency waiver closer to June, administration officials said. The EPA is also considering additional measures to allow year-round use of E15, the White House said.

The American Fuel and Petrochemical Manufacturers (AFPM) industry group questioned whether the E15 sales expansion was legal, arguing that the EPA waiver used is reserved for specific unforeseen events, such as hurricanes.

The courts overturned an earlier bid by Biden’s predecessor, Republican Donald Trump, in 2019 to extend a waiver that allowed year-round sales of E15s.

Officials who announced Biden’s announcement said his administration would use a different “approach” and “authority” than Trump’s, but did not provide details.

They also said the EPA would work with states to ensure there would be no “significant” negative impact on summer air quality due to the prolonged sale of E15.

Reporting by Alexandra Alper, Jarrett Renshaw and Steve Holland; additional reporting by Stephanie Kelly and David Morgan; Editing by Muralikumar Anantharaman, Mark Porter, Bill Berkrot and Aurora Ellis

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