Biden’s Ethanol Gas Price Trick

Source: By The Editorial Board, Wall Street Journal • Posted: Wednesday, April 13, 2022

The White House imitates a Trump stunt that failed in court.

A gas pump displays the price for E15, a gasoline with 15 percent of ethanol, at a gas station in Nevada in 2015. Photo: Jim Young/REUTERS

President Biden could reduce prices at the pump by unleashing the U.S. oil and gas industry. Instead he’s borrowing a trick from Donald Trump : Boosting Big Ethanol.

In Iowa on Tuesday, Mr. Biden announced an environmental waiver to allow sales of 15% ethanol gasoline blends (E15) this summer. The Clean Air Act prohibits this because higher ethanol blends can increase smog in hot weather. They can also erode older car engines, gas pumps, storage tanks and pipelines.

Only about 2,300 of the nation’s 150,000 gas stations are outfitted to sell E15, and most are in the Midwest. Hence the Environmental Protection Agency keeps revising down its renewable fuel standard to avoid crashing into this so-called blend wall.

In 2019 Mr. Trump directed the EPA to let E15 be sold year-round to help Midwest farmers. EPA then rewrote the Clean Air Act, claiming the text was “ambiguous.” The D.C. Circuit of Appeals disagreed and ruled that EPA had exceeded its statutory authority.

The Biden Justice Department opposed Supreme Court review of the decision, which it said would “restore the interpretation” that EPA has maintained “for most of the past three decades. And as a practical matter, a number of economic, logistical, and administrative barriers unrelated to the rule at issue here independently impede the widespread use of E15.”

Nothing has changed except that ethanol has become somewhat cheaper than gasoline feedstock. Mr. Biden says E15 can save drivers on average 10 cents a gallon, but the waiver will have a negligible impact on gas prices nationwide since so few stations sell it.

It’s also unclear what legal authority EPA intends to invoke. Under the law EPA can only issue emergency waivers to address temporary fuel-supply shortages in discrete regions or states. But there’s no fuel supply shortage now—except in California, where the low-carbon fuel standard has caused refineries to close or shift to heavily subsidized renewable diesel. That’s one reason California gas prices average $5.75 a gallon compared to $4.10 nationwide.

The Administration says subsidizing “homegrown biofuels” will build “real energy independence in the long-term by reducing our reliance on fossil fuels.” But even green groups say corn-based ethanol doesn’t reduce greenhouse-gas emissions. More land is diverted from food production, which means higher food prices.

Meantime, Congress’s ethanol mandate is causing many small refiners to shut down and the U.S. to import more foreign fuel. Last week EPA denied 36 hardship exemptions for small refineries, so even more could close.

The Administration wants to look as if it’s doing something, anything, to reduce gas prices, but all it comes up with are political gambits. How about encouraging more “home-grown” oil and gas production?