Biden Grants Gasoline Shift to Boost Ethanol in Corn Belt

Jennifer A. Dlouhy and Kim Chipman
·3 min read
28

(Bloomberg) -- The Biden administration granted a fuel policy change designed to boost sales of corn-based ethanol — but delayed the shift until next year amid concerns a rapid pivot could spur gasoline price spikes this summer.

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The approach underscores how election-year politics are complicating energy policymaking in Washington, as President Joe Biden seeks to propel climate and farmer-friendly initiatives without stoking higher fuel costs that could turn off voters.

The Environmental Protection Agency’s final rule — demanded by eight Midwestern US governors — is meant to encourage more filling stations in the region to sell E15 gasoline that contains 15% ethanol, instead of the conventional 10% variety known as E10.

It’s a victory for some of the nation’s top corn- and ethanol-producing states, including politically important Iowa and Wisconsin, because it will allow filling stations there to offer E15 year-round, instead of being hindered by air pollution limits that have long curbed summertime sales.

Read More: Big Oil Embraces Corn as Former Foes Unite Against EV Threat

The rule removes special treatment for E10 gasoline that exempts it from volatility limits. The shift effectively puts E10 and E15 on the same regulatory footing — and allows both varieties to use the same raw gasoline blendstock.

For fuel refiners and pipeline operators, the change will necessitate construction of storage tanks and other infrastructure. Oil industry leaders had warned the Biden administration the cost of those investments could be passed on to consumers at the gas pump — and said a too-fast transition would risk even bigger disruption and price spikes.

It will cost an extra 2 to 12 cents more per gallon to produce a less-volatile gasoline blendstock for the affected region, the EPA estimated, adding refiners would likely pass that onto consumers. A possible resulting reduction in gasoline supply could boost fuel prices even more, the agency said.

The agency is delaying the effective date for the change to April 28, 2025 — potentially forestalling any of those price impacts until after Election Day. The extension “reduces the risk of gasoline supply issues this summer and the price impacts that could have come with 2024 implementation,” the agency said in an emailed statement.

That’s is still not enough time to adjust, said Patrick Kelly, a senior director at the American Fuel and Petrochemical Manufacturers that represents refiners. “Studies show that even with at least a two-year lead time,” the “change will reduce overall supply, increase costs and make the region more vulnerable to supply disruptions,” Kelly said.

The delay was panned by biofuel advocates who called it unnecessary given Midwestern governors first sought the change in 2022. “With the 2024 summer driving season just a few months away, we are urging the administration to take additional action that will ensure consumers have uninterrupted access to lower-cost, lower-carbon E15 this summer,” said Geoff Cooper, head of the Renewable Fuels Association.

The EPA is expected to issue emergency waivers allowing E15 sales this summer, adopting a strategy used in 2023 and 2022.

The rule issued Thursday could add impetus to a broader congressional push to enable year-round E15 sales nationwide. Legislation has stalled amid resistance from some independent refiners, despite the backing of biofuel groups and the American Petroleum Institute, the oil industry’s lobbying powerhouse.

Emily Skor, head of the Growth Energy advocacy group, said the measure offers a more seamless solution for all 50 states. “The fuel supply chain is going to prefer a nationwide solution to a patchwork of regulations,” Skor said by email. “This rule calls attention to that fact.”

(Updates with gasoline price impacts and other details from seventh paragraph.)

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