EPA Will Allow More Ethanol in Gas This Summer in Bid to Tame Prices

Source: By Timothy Puko, Wall Street Journal • Posted: Tuesday, April 12, 2022

Existing rules ban gasoline made of 15% ethanol in summer to cut pollution from the more volatile mix

WASHINGTON—The Biden administration plans to temporarily allow high-ethanol content gasoline to be sold in the hot summer months in a bid to tame high fuel prices at the pump, according to senior administration officials.

The decision will allow gasoline with 15% ethanol to be sold between June 1 and Sept. 15. Normally only a 10% ethanol blend can be sold during that time period to reduce smog caused by the 15% blend’s higher volatility.

Allowing fuels with a higher ethanol content will lessen reliance on oil and give drivers more options, senior administration officials said, adding that it could save drivers 10 cents a gallon off current prices.

Oil-industry officials have questioned whether such moves would lower prices. Higher ethanol blending can sometimes raise prices on refiners. Corn prices, like oil, have also seen sharp increases this year because of Russia’s invasion of Ukraine.

Oil-industry leaders want Mr. Biden instead to find ways to encourage investment in more U.S. oil and gas production.

“We’re concerned that the administration is not focused on the real structural problems here and is attempting to find short-term fixes that don’t get at the heart of the issue,” Frank Macchiarola, the American Petroleum Institute’s senior vice president of policy, economics and regulatory affairs, said.

Environmentalists have also opposed past attempts to raise the summertime cap because of the additional smog created by the higher blend. But the higher content has long been supported by farmers who grow corn used to make ethanol.

The Environmental Protection Agency will cite Russia’s invasion of Ukraine in issuing an emergency exemption to allow fuel with 15% ethanol to be sold over the summer, the officials said. They announced the action ahead of Mr. Biden’s visit to an ethanol plant in Iowa on Tuesday.

“The focus here is also on making sure we are meeting the near-term supply emergency and doing so by leveraging homegrown fuels,” one of the senior officials said.

The agency will review every 20 days whether to keep the emergency measure in place, officials said.

E15, the term for gasoline with 15% ethanol, is currently sold at about 2,300 gas stations, according to the Biden administration. There are more than 150,000 fueling stations nationally, according to API.

Mr. Biden campaigned promising tougher environmental rules but has been under pressure for months to address historically high gasoline prices.

Polls show voters are frustrated by inflation fed by those prices, and some congressional Democrats are anticipating tough midterm elections that could cost them control of the House and Senate.

Under former President Donald Trump, the EPA moved to permanently allow summertime sales of gasoline with a 15% mix of ethanol, in what his administration described as a compromise between agriculture and energy interests.

U.S. refiners sued and a federal appeals court struck it down last summer, saying the Trump administration overreached its authority.

A three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit said the EPA had improperly reinterpreted legal language in the Clean Air Act long understood as limiting ethanol to 10% of the content of gasoline during summer months.

Senior Biden administration officials say their decision is based on different authority. They also said the EPA has determined there won’t be environmental harm from the change.

Write to Timothy Puko at tim.puko@wsj.com