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 preventing the sale of higher ethanol blend gasoline this summer, as his administration tries to tamp down prices at the pump that have spiked during Russia’s war with 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 15% ethanol blend that is usually prohibited between June 1 and Sept. 15 because of concerns that it adds to smog in high temperatures.

Senior Biden administration officials said the move will save drivers an average of 10 cents per gallon at 2,300 gas stations. Those stations are mostly in the Midwest and the South, including Texas, according to industry groups.

The move comes as Biden is facing growing political pressure over inflation, as new data Tuesday showed prices are rising at the fastest pace in more than 40 years, driven in part by soaring energy prices during the Russia-Ukraine war. The Labor Department said Tuesday that 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 in prices. Food and housing costs also climbed in March 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 begun analyzing the “emergency” step of allowing more E15 gasoline sales for the summer and determined it is not likely to have significant on-the-ground air quality impacts. That’s despite some environmentalists long arguing that more ethanol in gas increases pollution.

Biden is to announce 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 technologically glitchy 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 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 struggling with higher costs, while highlighting the $1 trillion bipartisan infrastructure law enacted last fall. The 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 get out the vote and early voting efforts for Barack Obama’s presidential campaign in 2008.

Harris said most presidents who visit Iowa typically go to the state’s largest cities. Hitting an area like Menlo, part of Guthrie County, which backed Trump over Biden by 35 percentage points in 2020, “does speak to the importance the administration places on infrastructure broadly but also infrastructure in rural and smaller communities.”

The Biden administration plans to spend the coming weeks pushing billions of dollars in funding for rural areas. Cabinet members and other senior officials will travel the country to help communities get access to money available as part of the infrastructure package.

“The president is not making this trip through a political prism,” White House press secretary Jen Psaki said. “He’s making this trip because Iowa is a rural state in the country that would benefit greatly from the president’s policies.”

Still, administration officials have long suggested that Biden travel more to promote an economy that is rebounding from the setbacks of the coronavirus pandemic. The number of Americans collecting unemployment has fallen to the lowest levels since 1970, for example.

But much of the positive jobs news nationally has been overshadowed by surging gas, food and housing prices that have offset wage gains.

“Maybe a trip back to Iowa will be just what Joe Biden needs to understand what his reckless spending, big government policies are doing to our country,” Iowa Republican Party Chairman Jeff Kaufmann said in a statement.

After Iowa, Biden will visit Greensboro, North Carolina, on Thursday.

Psaki blamed Russia’s war in Ukraine for helping to drive up gas prices and said the administration expects the consumer price index for March to be “extremely elevated” in large part because of it.

The EPA has lifted seasonal restrictions on E15 in the past, including after Hurricane Harvey in 2017. The Trump administration allowed for selling E15 in the summer months two years later but had the rule struck down by a federal appeals court.