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Why Biden’s Plan for Cheaper Gasoline Can Also Mean More Smog

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(Bloomberg) President Joe Biden is all in on a new plan to bring down gasoline costs. It turns out that the move is also likely to make the air dirtier.

Biden is planning expanded sales of gasoline with a higher ethanol content than usual during the summer months. Most American fuel stations already carry gasoline mixed with about 10% ethanol, made from corn. But this summer, more drivers will be able to fill their cars up with E15 — the 15 stands for 15% ethanol.

E15 isn’t typically sold in parts of the U.S. during summer months because it’s thought to be a more volatile mix which releases more particles that lead to air pollution. That’s particularly a problem during the summer when increased heat and light interact with the particles to create more smog.

The move speaks to the tight position that Biden is in as he attempts to calm inflation that’s running at a 40-year high. The president, who campaigned on promises to fight climate change, has taken a number of recent steps that seem to run to counter to that goal in order to deal with gasoline prices that are topping $4 a gallon nationally. In addition to the E15 plan, Biden has also called on OPEC+ and U.S. producers to boost oil output.

Biden’s expansion for E15 will have the biggest impact in the Midwest, where prices could decrease as much as 10 cents, Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said in a Bloomberg TV interview.

But other than that, the result is expected to be pretty minimal, including because few fuel stations are able to offer the E15 blend.

Higher U.S. pump prices add to inflation

Limited price impact from the E15 plan could leave the administration searching for more ways to bring down fuel costs. Some of his other options would also likely be seen as a step back by climate advocates.

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Renewable Fuel Standard

One of those options would be to roll back federal renewable fuel blending mandates.

The current program, known as the Renewable Fuel Standard, requires gasoline and diesel to be blended with renewable fuels, which are less carbon-intense. Maintaining the requirement has been a significant component of the Biden administration’s push to reduce the country’s reliance on fossil fuels.

But the mandate also raises costs for oil refiners. Waiving the requirement could lead to cheaper gasoline prices. And Biden is now facing some calls to reduce blending targets for 2022, due to be finalized in June.

RVP waivers

Another move that would likely bring down gasoline costs would be to issue waivers to allow gasoline that can easily evaporate into the atmosphere to be sold during the summer.

The EPA currently sets standards for Reid vapor pressures that limit warm-weather emissions. RVP waivers — typically used to increase supply during emergencies such as hurricanes — would allow a greater pool of gasoline components to go into the finished fuel, such as butane.

Of course, this move would also increase emissions, while having a limited impact on pump prices. Summer-grade low-RVP gasoline costs but a few cents per gallon less than the high-RVP winter grades, based on wholesale market prices.

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