Biden will ease restrictions on higher-ethanol fuel as inflation hits a 40-year high

On a day when inflation hit its highest monthly figure in 40 years, President Biden announced Tuesday that his administration will temporarily allow E15 gasoline — gasoline that uses a 15% ethanol blend that is usually banned from sale from June to September — to be sold this summer, a measure intended to help ease gas prices.

The president made the announcement at an ethanol plant in the small town of Menlo, about 50 miles west of Des Moines, Iowa, the country's leader in the production of corn, which is vital to biofuels.

Biden said the move is "not going to solve all our problems, but it's going to help some people. And I'm committed to do whatever I can to help — even if it's an extra buck or two in their pockets as they fill up — to make a difference in people's lives."

On Tuesday, the Labor Department reported that consumer prices in March were 8.5% higher than a year ago — the sharpest increase since December 1981. Gas prices are up 48% since last year, in part because of instability in global markets after Russia's invasion on Ukraine.

The White House has struggled to get inflation under control after promising that it would slow as the country emerged from the coronavirus recession.

Biden put the blame for the gas price spike on Russian President Vladimir Putin and said progress was being made to slow inflation.

"I'm doing everything within my power by executive orders to bring down the prices and address the Putin price hike," Biden said. "In fact, we've already made progress since March inflation data was collected. Your family budget — your ability to fill up your tank — none of it should hinge on whether a dictator declares war and commits genocide half a world away."

Biden admitted that E15 fuel is available only "at a few thousand pumps today," but said the U.S. will invest $100 million in biofuel infrastructure. E15 gas is currently available at about 2,300 fueling stations, according to the Department of Energy.

The president also said biofuels would help the aviation industry zero out its carbon use by 2050.

"This industry has a role to play in a sustainable energy future," he said. "But I'm here today because homegrown biofuels have a role to play right now — right now — as we work to get prices under control and reduce the costs for families."

What is ethanol?

Ethanol is a fuel commonly made from corn that, under the 2005 federal Renewable Fuel Standard, is required to be blended into billions of gallons of gasoline each year.

In contrast to E10, which makes up the bulk of gasoline sold in the United States, the sale of E15 is typically banned during the summer under the Clean Air Act because of air pollution concerns.

Why is Biden allowing the sale of E15 gasoline?

Gas prices have risen dramatically in the last few months, reaching a national average price of about $4.01 per gallon as of Tuesday, according to AAA. That's down somewhat from last month's high, but still a considerable jump from this time last year when prices were $2.86 a gallon.

Analysts attribute much of that increase to turbulent oil markets in the wake of Russia's invasion of Ukraine. While the U.S. does not import much oil from Russia — and has now banned its import — it is a major global supplier.

"The President is committed to doing everything he can to address the pain Americans are feeling at the pump as a result of Putin's Price Hike," the White House said in a statement. "The Administration's strategy to spur the development of homegrown biofuels is critical to expanding Americans' options for affordable fuel in the short-term and to building real energy independence in the long-term by reducing our reliance on fossil fuels."

Who will benefit from E15 gas sales?

The move will likely prove unpopular with major oil companies, which has long campaigned against increasing the amount of ethanol in fuel tanks — a rare bit of bad news at a time of record profits for the industry. U.S. oil giant Exxon said earlier this month that it is set to top a seven-year record for quarterly profits.

In 2019, President Donald Trump allowed E15 to be sold year-round in what was seen at the time as a bid to increase his political standing with farmers after his trade war with China hurt U.S. farmers. It was a move that a federal court overruled after the fact, saying EPA exceeded its authority, and the Supreme Court declined to take up an appeal earlier this year.

Calls for Biden to follow Trump's lead came from a number of farm-state lawmakers, including Iowa Republican Sens. Chuck Grassley and Joni Ernst.

The impact on gas prices remains to be seen. Compared with E10 gas, there is limited infrastructure to sell E15 gasoline because not all vendors are willing to invest in a product that cannot be sold year-round.

In another bid to drive down prices at the pump, Biden announced last month an unprecedented plan to draw 1 million barrels of oil per day from the U.S. Strategic Petroleum Reserve through the summer.

And although industry groups have touted alleged emissions benefits of biofuels like ethanol, a 2018 report from the Government Accountability Office noted "limited effect, if any, on greenhouse gas emissions."

While the administration has pledged to halve U.S. greenhouse gas pollution from 2005 levels in the next eight years, Biden's climate policy goals have largely fallen by the wayside as the president faces sagging approval ratings and strong economic headwinds ahead of the midterm elections.