The Biden administration is expected to ease seasonal restrictions on ethanol-gasoline blends but has delayed the change until after the 2024 election to avoid a price spike, according to Reuters.
The rule change stems from a 2022 request from the governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin to allow the sale of gasoline with 15% ethanol year-round, known as E15 gasoline, lifting current seasonal restrictions that aim to reduce smog in the summer months, according to Reuters. The Environmental Protection Agency (EPA) had originally set an effective date of April 28, 2024, for the changes when the agency sent the proposal to the White House in December, but that is now expected to be pushed back to 2025.
Top oil refiners, including HF Sinclair Corp. and Philips 66, have warned against the change, saying that it would complicate fuel supply logistics and increase the risk of area shortages, possibly raising prices, according to Reuters. The ethanol industry has lobbied for the changes, saying that the environmental concerns are exaggerated.
Gas prices spiked nationally to an average of over $5 per gallon in June 2022 amid supply constraints from Russia’s invasion of Ukraine, according to the Federal Reserve Bank of St. Louis. Prices receded to nearly $3.10 per gallon in December 2022 before climbing up to just under $3.90 per gallon in August 2023.
The national average for a gallon of gas was $3.276 as of February 20, according to the AAA.
The new rule change would only affect midwestern states, with the ethanol industry calling for a country-wide expansion in addition to the regional change, according to Reuters. A country-wide fix would ease the risks of area shortages that refiners are concerned about.
Former President Donald Trump flipped typical midwestern blue states Michigan and Wisconsin in the 2016 election and came very close to winning Minnesota. The new rule change could raise gas prices in the battleground states of Wisconsin and Minnesota due to their large corn industries, putting the president’s reelection bid at risk, according to Reuters.
The EPA granted an emergency waiver in April 2023 and in 2024 permitting E15 gasoline to be sold during the summer in an effort to keep gas prices down amid oil supply volatility from Russia’s invasion of Ukraine. The move was praised by the midwestern corn industry, which provides the products to produce the ethanol used in E15 gasoline.
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