Biden boosts ethanol to lower US fuel prices amid war in Ukraine

With gas prices surging amid Russia’s invasion and inflation rising, US president unveils new plan for corn-based fuel.

An ethanol plant with its giant corn silos next to a cornfield in Windsor, Colorado.
Corn and ethanol producers in the US Midwest will be the big winners from President Joe Biden's new plan [File Photo/Reuters]

Joe Biden has unveiled a new plan to widen the availability of petrol blended with corn-based ethanol, as the US president seeks to curb soaring fuel costs in the United States linked to the Russian war in Ukraine.

Biden travelled to the US state of Iowa, a major producer of corn and ethanol, on Tuesday to announce that he is suspending a federal rule to allow for the sale of higher ethanol blends in petrol in the coming months.

The measure came in the form of a national security waiver by the Environmental Protection Agency (EPA) allowing the use of more ethanol in automotive fuels.

“Putin’s invasion of Ukraine has driven up gas prices and food prices all over the world,” Biden told workers at POET Bioprocessing, the largest biofuels producer in the country.

“The Environmental Protection Agency is planning to issue an emergency waiver allowing E15 gasoline that uses more ethanol from homegrown crops to be sold across the United States this summer to increase fuel supply.”

President Joe Biden and Representative Cindy Axne, an Iowa Democrat, talk with Jack Mitchell, regional vice president of POET Bioprocessing, right, as he gives a tour at POET Bioprocessing in Menlo, Iowa.
President Joe Biden tours POET Bioprocessing in Menlo, Iowa [Carolyn Kaster/AP Photo]

Speaking before the official announcement, White House press secretary Jen Psaki said the move is aimed at “building real energy independence in the long-term by reducing our dependence on fossil fuels”.

“We have seen gas go up anywhere from 80 cents to a dollar since President Putin invaded Ukraine,” Psaki told reporters travelling with the president on Air Force One.

The emergency measure will allow Americans to buy more petrol that uses a 15 percent ethanol blend during peak US summer driving months from June to mid-September.

On average, it will save motorists about 10 cents a gallon (3.78 litres), although they will get fewer miles from a tank of petrol because ethanol provides less energy, senior White House officials said.

Russia’s invasion of Ukraine has pushed worldwide crude oil prices to recent highs, leading to higher prices at the pump and adding to rising inflation in the US.

Biden last month announced that the US government would release 180 million barrels of crude from its Strategic Petroleum Reserve at a rate of one million barrels per day starting in May, the biggest release from the stockpile since it was created in the 1970s.

“That has helped stop the run-up of oil prices and has begun to bring prices down a little bit,” Biden said on Tuesday.

Inflation is seen as a significant liability for congressional Democrats heading into the November mid-term elections. US consumer prices have jumped 8.5 percent in the past 12 months, according to the Labor Department.

Seeking to deflect public blame from Biden, whose poll numbers have sagged, White House officials have begun to characterise the rising cost of petrol as the “Putin price hike”.

Global oil prices climbed on Tuesday as OPEC warned it would not be able to replace potential losses of Russian oil in worldwide supply. Brent crude futures rose to $104 a barrel and West Texas intermediate hit $100 a barrel, up about 6 percent from Monday.

Biden’s ethanol waiver is a win for US corn farmers because it will expand demand for ethanol and raise market prices for corn. But it is a setback for oil refiners who view ethanol as competition and can be expected to contest the move in court.

Previously, the EPA has imposed a summertime ban on petrol with 15 percent ethanol because it was believed to contribute to smog during hot weather.

Gasoline prices approaching $5 a gallon are displayed at a gas station in Vernon Hills, Illinois.
Gasoline prices have approached $5 a gallon in the US, a relatively high price for Americans accustomed to lower costs [File: Nam Y Huh/AP Photo]

“We applaud President Biden and his administration for recognizing that low-cost, low-carbon ethanol should be given a fair opportunity to strengthen our energy security and reduce record-high pump prices,” Renewable Fuels Association President Geoff Cooper said.

A representative of the oil industry criticised the Biden administration for the decision.

“Americans are looking for long-term solutions, not short-term political fixes,” said Ron Chit, a spokesman for the American Petroleum Institute, the US oil industry’s main lobbying organisation.

Source: Al Jazeera and news agencies