The White House is delaying action on requests from Farm Belt states to allow regional sales of ethanol-blended gasoline after warnings from the oil industry about potential supply disruptions and price spikes, according to sources familiar with the matter.
This decision highlights concerns within President Joe Biden‘s administration over fuel prices, as opinion polls reveal concerns about inflation and the economy.
Eight Midwestern governors petitioned the Environmental Protection Agency to allow the sale of gasoline blended with 15% ethanol year-round, citing the need to lower pump prices after the Russia-Ukraine conflict caused a surge in prices.
The EPA issued a proposal to approve the governors’ request but has failed to finalize the proposal after warnings from oil refiners about the impact on fuel supply logistics and the risk of shortages.
Amidst concern that higher pump prices in certain states could affect Biden’s re-election, the White House has delayed action, according to sources familiar with the administration’s thinking.
Ethanol, a domestically produced alternative fuel made from corn, is cheaper than gasoline by volume and increasing its use in the fuel mix can lower prices. However, the U.S. government restricts sales of E15 gasoline in summer months due to environmental concerns.
The ethanol industry has long advocated for lifting the restrictions on E15 sales nationwide, arguing that the environmental impacts have been overstated.
The oil and ethanol industries have presented conflicting studies on the impact of E15 sales, with one showing price increases and the other showing no price increases due to the use of lower-cost ethanol.
University of Houston energy economist Ed Hirs highlighted the vulnerability of the White House and Biden’s re-election campaign to accusations that approving the requests by the governors caused fuel prices to spike, even if something else was to blame.
(Reporting by Jarrett Renshaw and Stephanie Kelly; Editing by Will Dunham)
