The Biden administration is set to ease seasonal restrictions on ethanol-gasoline blends, specifically allowing the year-round sale of gasoline with 15% ethanol, known as E15 gasoline. This rule change, initially requested in 2022 by the governors of several Midwestern states, including Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin, aims to eliminate current seasonal restrictions designed to reduce smog during summer. However, the implementation, initially slated for April 28, 2024, is now expected to be postponed until 2025.
Top oil refiners, including HF Sinclair Corp. and Philips 66, have expressed concerns about the change, warning that it might complicate fuel supply logistics and elevate the risk of shortages, potentially leading to increased prices. The ethanol industry has advocated for the modifications, asserting that environmental concerns are overstated.
Gas prices reached over $5 per gallon nationally in June 2022 due to supply constraints arising from Russia’s invasion of Ukraine. While prices dipped to nearly $3.10 per gallon in December 2022, they rose to just under $3.90 per gallon in August 2023. As of February 20, the national average for a gallon of gas stood at $3.276, according to AAA.
The proposed rule change would specifically impact Midwestern states, with the ethanol industry pushing for a nationwide expansion beyond regional adjustments to mitigate refiners’ concerns about potential shortages.
The shift in ethanol-gasoline blend regulations holds potential political ramifications, particularly in battleground states like Wisconsin and Minnesota, where a significant corn industry is present. Analysts suggest that the rule change could lead to higher gas prices in these states, possibly affecting the president’s reelection bid.
In response to previous oil supply volatility resulting from Russia’s invasion of Ukraine, the EPA granted an emergency waiver in April 2023 and in 2024, allowing the sale of E15 gasoline during the summer. The move aimed to stabilize gas prices and received support from the Midwestern corn industry, a key contributor to ethanol production for E15 gasoline.
As of now, the White House and the EPA have not provided immediate comments on the matter.
