On April 12, 2022, President Joe Biden visited Menlo, Iowa, to announce a plan to waive rules that restrict ethanol blending in gasoline, aiming to lower gasoline prices by about a dime a gallon at a limited number of stations. This move is part of the administration’s efforts to ease price pressures, as inflation has reached a 40-year high. According to a government report released on April 12, 2022, consumer prices jumped 8.5% in March from a year ago, with more than half of the increase coming from higher gas prices.
the impact of inflation on the economy
The inflation report has deepened the political challenge for Biden and fellow Democrats ahead of the 2022 midterm elections. Biden called the inflation report “Putin’s price hike,” referring to the impact of Russia’s war in Ukraine on global energy markets. “Your family budget, your ability to fill up your tank, none of it should hinge on whether a dictator declares war and commits genocide a half a world away,” the U.S. president said. The administration’s efforts to address inflation include releasing 1 million barrels of oil per day from the nation’s strategic petroleum reserve over the next six months, which has helped to slightly reduce gas prices lately.
the ethanol waiver and its effects
The Environmental Protection Agency will issue an emergency waiver to allow the widespread sale of a 15% ethanol blend, which is usually prohibited between June 1 and September 15 due to concerns about smog in high temperatures. Senior Biden administration officials said the action will save drivers an average of 10 cents per gallon based on current prices, but at just 2,300 gas stations out of the nation’s more than 100,000. The affected stations are mostly in the Midwest and the South, including Texas, according to industry groups. Emily Skor, CEO of the biofuel trade association group Growth Energy, said, “Not only is this decision a major win for American drivers and our nation’s energy security, it means cleaner options at the pump and a stronger rural economy.”
reactions from congress and industry leaders
Members of Congress from both parties had urged Biden to grant the E15 waiver. Iowa Republican Sen. Chuck Grassley said, “Homegrown Iowa biofuels provide a quick and clean solution for lowering prices at the pump, and bolstering production would help us become energy independent once again.” He was among nine Republican and seven Democratic senators from Midwestern states who sent Biden a letter last month urging him to allow year-round E15 sales. The president’s trip to Iowa was also seen as an opportunity to promote his economic plans to help rural families and highlight the $1 trillion bipartisan infrastructure law enacted last fall.
the broader economic context
The high inflation rate has hijacked the administration’s ambitions to run on the low 3.6% unemployment rate and an agenda geared toward lifting the middle class. Instead, Republicans have targeted criticism at the administration’s handling of the economy and inflation. Iowa Republican Party Chairman Jeff Kauffman was unsparing in his criticism of Biden’s handling of the economy and inflation, but said the temporary move on ethanol was the right one. As the midterm elections approach, the administration will face continued pressure to address the rising cost of living and its impact on American families. The president’s efforts to ease price pressures, including the ethanol waiver, are part of a broader strategy to promote American energy security and support rural economies. With the inflation rate showing no signs of slowing, the administration will need to continue to deploy all available tools to address the crisis and restore economic growth.
