Biden tapped ethanol to reduce fuel prices as consumer inflation rose

US President Joe Biden pays tribute as he steps out of Marine One on April 11, 2022 when he arrives at the White House in Washington, DC. REUTERS / Kevin Lamarque

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WASHINGTON, April 12 (Reuters) – US President Joe Biden on Tuesday announced plans to extend the availability of more biofuel blends in the summer to curb rising fuel costs and reduce dependence on foreign energy sources, senior executives said.

The move reflects management’s recent efforts to reduce inflation, reaching a new 40-year high on L2N2W91K on Tuesday. Biden’s poll numbers have fallen under the weight of high consumer spending and inflation is seen as a significant liability for the November midterm elections.

The decision marks a victory for the US corn lobby by expanding demand for corn-based ethanol, and a setback for oil refineries that see ethanol as a competitor.

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The move would allow Americans to continue to buy E15 petrol, which uses 15% ethanol blend, from June 1 to September 15. The E15 is on average only 10 cents cheaper and less “energy dense”, meaning drivers have to buy it. Officials told reporters in a preview call of the announcement that buying more fuel would help it cost even less.

“Those savings continue to be a supply emergency, especially during the summer months, when fuel is being raised and (Russian President Vladimir)’s occupation caused by Putin’s occupation,” a senior executive said.

The decision comes after several weeks of internal debate at the White House against environmental lawyers such as Gina McCarthy against former Iowa governor Tom Wilsock, according to two sources familiar with the debate.

A summer ban was imposed on the E15, which contributes to smog in hot climates, although research shows that the 15% compound does not increase smoke compared to the typical 10% compound sold throughout the year.

Russia’s invasion of Ukraine and subsequent sanctions and boycotts have pushed retail petrol prices to record highs, a blow to Biden’s fellow Democrats in the November congressional election.

Biden announced last month that the U.S. would sell 180 million barrels of crude from strategic petroleum reserves at a rate of 1 million barrels per day, starting in May, the largest release from stock since it was created in the 1970s.

Corn VS oil

Biden will announce the E15 extension during a visit to POET bioprocessing, the largest biofuel manufacturer in the United States, in Iowa, a major corn-producing state.

“We commend President Biden and his administration for realizing that low cost, low carbon ethanol should provide a reasonable opportunity to strengthen our energy security and reduce record high pump prices,” said Jeff Cooper, president of the Renewable Fuels Association.

Representatives of the oil industry have strongly criticized the administration for this decision.

“Americans are looking for long-term solutions, not short-term political solutions (for higher gas prices),” said Ron Sid, a spokesman for the American Petroleum Corporation, the oil industry’s major campaign arm.

“The best way to ensure that Americans have access to the affordable and reliable energy they need is to promote policies that promote U.S. production and send a clear message that the United States is open to energy investment,” he said.

The U.S. Fuel and Petrochemical Manufacturers (AFP) industry group has questioned whether the expansion of E15 sales is legal.

To make the change, the Environmental Protection Agency (EPA) plans to offer a national emergency rebate closer to June, officials said. The White House says the EPA is considering additional measures to allow E15 to be used year-round.

“Emergency fuel discounts are reserved for short-term and very specific unforeseen events and regionally severe supply disruptions resulting from a hurricane,” AFP CEO Chad Thompson said.

Courts have rejected an attempt by Biden’s predecessor, Republican Donald Trump, in 2019 to extend the E15’s year – long discount.

Officials who previewed Biden’s announcement said his administration would have a different “attitude” and “authority” than Trump, but did not provide details.

They also said the EPA would work with states to ensure there is no “significant” negative impact on summer air quality due to extended sales of E15.

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Report by Alexandra Alber and Jared Renshaw; Additional Report by Stephanie Kelly; Editing by Muralikumar Anandaraman, Mark Porter and Bill Bergrod

Our standards: Thomson Reuters Trust Principles.

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