Biden waives ethanol rule in bid to lower gas prices | Economic news



MENLO, Iowa (AP) — With inflation at its highest level in 40 years, President Joe Biden visited corn-rich Iowa on Tuesday with a modest measure to cut gasoline prices by about a penny a gallon at a limited number of stations by waiving rules that restrict ethanol blending.

His announcement reflects how Biden deploys nearly every weapon in his bureaucratic arsenal to ease price pressures, but the impact appears small and uncertain. Inflation has only picked up in recent months, instead of waning as Biden once promised after the coronavirus recession recovery from the $1.9 trillion relief package Last year.

Tuesday’s government report that consumer prices jumped 8.5% in March from a year ago – the worst reading since December 1981 – only deepened Biden’s challenge in defense of Democrats ahead of this year’s midterm elections. More than half of the increase is due to rising gasoline prices, which have risen in part due to Russia’s war in Ukraine, but costs have also jumped for housing, food and d other items.

Most gasoline sold in the United States is blended with 10% ethanol, a biofuel currently cheaper than gasoline. Biden was announcing that the Environmental Protection Agency would issue an emergency waiver to allow the widespread sale of a 15% ethanol blend that is generally banned between June 1 and September 15 due to concerns that it adds to smog at high temperatures.

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Top Biden administration officials said the action would save drivers an average of 10 cents per gallon based on current prices, but at only 2,300 of more than 100,000 gas stations nationwide. The affected stations are mostly in the Midwest and South, including Texas, according to industry groups.

Administration officials said the EPA has determined that the “emergency” step of allowing more E15 gasoline sales for the summer is unlikely to have a significant impact on fuel quality. the air. This is despite the fact that some environmentalists have long argued that more ethanol in gasoline increases pollution, especially during the hotter summer months.

Biden was announcing the move to a biofuels business in Menlo, west of Des Moines. Iowa is the nation’s largest producer of corn, essential for ethanol production.

The waiver is another effort to help calm global energy markets that have been rocked since Russia invaded Ukraine. Last month, the president announced that the United States would release 1 million barrels of oil a day from the country’s strategic petroleum reserve over the next six months. His administration said that has helped push gasoline prices down slightly of late, after averaging around $4.23 a gallon in late March, down from $2.87 the same time ago. a year, according to AAA.

“Not only is this decision a major victory for American drivers and our country’s energy security, but it means cleaner options at the pump and a stronger rural economy,” said Emily Skor, CEO of the association group. biofuels company Growth Energy, in a press release.

Members of Congress from both parties had also urged Biden to grant the E15 waiver.

“Iowa’s local biofuels offer a quick, clean solution to lower prices at the pump, and boosting production would help us become energy independent again,” said the Republican senator from Iowa, Chuck Grassley. He was among nine Republican senators and seven Democrats 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 caucus. He will come to grips with falling approval ratings and high inflation as his party faces the prospect of big midterm electoral losses that could cost him control of Congress.

The president also planned to promote his economic plans to help rural families and highlight the bipartisan $1 trillion infrastructure law signed into law last fall. This law includes funds to improve internet access, as well as to upgrade sewage systems, reduce flood threats, and improve roads and bridges, drinking water and electrical networks in sparsely populated areas. .

Biden had hoped Democrats could function with the low 3.6% unemployment rate and an agenda to uplift the middle class, but inflation hijacked those ambitions and gave Republicans a target of criticism.

Iowa Republican Party Chairman Jeff Kauffman was vocal in his criticism of Biden’s handling of the economy and inflation. But, he said, the temporary decision on ethanol was the right one.

“First of all, let me say this is a good thing. Absolutely good thing. It would have been nice if he had done it sooner,” Kauffman said. “Am I happy with this renunciation? Yes. Is it sufficient? Nope.”

High inflation also poses a threat to Biden’s broader domestic agenda which likely hinges on the vote of Democratic Sen. Joe Manchin of West Virginia. Manchin issued a statement saying that the Biden administration and the Federal Reserve did not “move fast enough” to reduce costs for the American people and that the high price problem predates the invasion of Ukraine.

Manchin, whose opposition condemned Biden’s 10-year, roughly $2 trillion measure in December, had recently returned to the negotiating table with the White House. It remains unclear what impact the new inflation data will have on these negotiations.

After Iowa, Biden will travel Thursday to Greensboro, North Carolina.

The EPA has lifted seasonal restrictions on E15 in the past, including after Hurricane Harvey in 2017. The Trump administration did so in the summer two years later, but that action was reversed by a lawsuit. federal appeals court.

A group representing oil refiners lambasted Biden’s decision, saying the only urgency was his declining poll numbers.

“We are here with the administration to want to see relief for consumers at the pump, but an illegal executive order is not the way to solve the problem,” said Chet Thompson, president and CEO of American Fuel & Petrochemical Manufacturers.

Josh Boak and Matthew Daly reported from Washington. AP writers Tom Beaumont in Des Moines and Farnoush Amiri in Washington contributed.

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