Biden taps ethanol to help lower fuel prices as consumer inflation surges

Source: By Steve Holland, Reuters • Posted: Wednesday, April 13, 2022

MENLO, Iowa (Reuters) – U.S. President Joe Biden unveiled plans on Tuesday to extend the availability of higher biofuel blends of gasoline during the summer to curb soaring fuel costs and to cut reliance on foreign energy sources.

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

Biden’s poll numbers have sagged under the weight of higher consumer costs and inflation is seen as a significant liability heading into the November mid-term elections.

The decision represents a win for the U.S. corn lobby by likely expanding demand for corn-based ethanol and a setback for oil refiners, which view ethanol as competition.

The measure will allow Americans to keep buying E15, a gasoline that uses a 15% ethanol blend, from June 1 to Sept. 15. While E15 is only 10 cents cheaper on average and is less “energy dense,” meaning drivers would need to buy more fuel, it should still help lower expenses, senior administration officials told reporters on a Monday call previewing the announcement.

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

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

He added there is more to do to bring down gas prices.

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

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

The summertime ban on E15 was imposed over concerns it contributes to smog in hot weather, though research has shown that the 15% blend may not increase smog relative to the more common 10% blends sold year-round.

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