Biden Unlocks Sales of Higher-Ethanol E15 Gasoline After Corn Belt Pressure

(Bloomberg) -- The Biden administration on Friday issued an emergency waiver to enable widespread sales of higher-ethanol E15 gasoline this summer, following a strategy used to help pare high pump prices last year.

The Environmental Protection Agency’s move temporarily exempts the 15% ethanol fuel blend from volatility requirements that effectively block sales from June 1 to Sept. 15 throughout much of the country. 

EPA Administrator Michael Regan said the move would protect “Americans from fuel supply challenges resulting from the ongoing war in Ukraine by ensuring consumers have more choices at the pump.”

The waiver comes after weeks of lobbying by ethanol advocates, including elected officials from corn-producing Midwest states, who were frustrated by a separate Biden administration decision to delay another policy shift that aimed to more permanently expand summertime E15 sales. 

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It also is the latest sign of the biofuel industry’s political clout in the nation’s capital, coming just days after House Republican leaders yielded to demands of Midwest lawmakers and gave biofuel tax credits a last-minute reprieve from their bill abolishing hundreds of billions of dollars in clean energy incentives.

Ethanol producers and their allies on Capitol Hill cheered the administration’s action. “EPA’s action allowing summertime E15 will help extend gasoline supplies, prevent fuel shortages, protect air quality and reduce carbon emissions,” said Geoff Cooper, chief executive officer of the Renewable Fuels Association.

To justify the emergency move, the EPA cited conditions similar to those that provided the foundation for a series of the temporary waivers last year. The EPA said Friday the fuel volatility waiver for E15 was in the public interest and needed to address extreme and unusual fuel supply circumstances amid the war in Ukraine. The waiver will run from May 1-20, with successive exemptions expected. 

Ethanol advocates argued conditions are actually worse now — with tight gasoline inventories and less emergency crude in the nation’s stockpile even as the war rages on.

There are political benefits, too. While gasoline prices aren’t near last year’s highs, they remain elevated heading into the summer driving season — and are one of the most visible forms of inflation, weighing on Joe Biden’s reelection bid. If prices spike again, Biden could point to the E15 action as an attempt to provide relief. 

Even so, E15 is only available at about 2,700 of the nation’s more than 150,000 filling stations. However, an analysis conducted for the pro-ethanol group Growth Energy said that when summertime E15 sales were greenlighted last year, the blend cost 16 cents-per-gallon less than conventional E10 on average.

Growth Energy CEO Emily Skor said the waiver means motorists will “have access to savings on lower-carbon E15” this summer.

Oil industry advocates have questioned the legality of the emergency approach, raising the specter of a court challenge. The EPA’s criteria for emergency waivers “require a finding of inadequate domestic supply in a specific geographic area,” noted Chet Thompson, CEO of the American Fuel and Petrochemical Manufacturers association. But “the US market is well supplied with gasoline.”

Any increased ethanol sales could modestly trim the cost of biofuel compliance credits refineries use to comply with federal blending mandates. 

Conventional E10 gasoline, which is widely sold across the US, has a partial waiver from the same fuel volatility limits already — an exemption Midwestern governors have asked the EPA to abolish.

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