Motorists in the American Midwest could pay an extra 12 cents per gallon for gasoline under a fuel policy shift demanded by governors in the region, according to a new refining industry-commissioned analysis.
The study, conducted by Baker & O’Brien Inc. for the main US refining trade group, outlines larger-than-expected impacts of the change, which is part of a bid to encourage filling stations to sell higher ethanol E15 gasoline and offer it year round. That’s in stark contrast to a previous estimate commissioned by advocates of corn-based ethanol that saw only a 2-cents per gallon increase for consumers.
The latest study underscores the high political and economic stakes facing President Joe Biden and the Environmental Protection Agency, which has no latitude under federal law to deny the change — only delay it. Already, formal government action on the issue has been stalled amid opposition from refiners and pipeline operators stoking concerns about the economic consequences amid record-setting inflation.
The White House is reviewing a drafted formal rulemaking notice, setting the stage for the EPA to seek public comment on the plan within weeks — potentially too late to make the change before the summer driving season. The stalemate has drawn the ire of state attorneys general and lawmakers.
At issue is a push by seven Midwestern governors to stop giving conventional E10 gasoline a partial waiver from volatility limits meant to curb air pollution. That would put E10 and E15 on the same regulatory footing in their states — and potentially encourage more sales of the higher-ethanol variety. But to meet the EPA requirements, refineries would have to churn out raw, unblended gasoline that is less volatile, essentially creating a boutique fuel for the affected Midwest states. And that, in turn, would prompt a slew of changes across the fuel supply chain, beginning at the refineries forced to forgo using butane and other inexpensive, evaporation-prone gasoline components that make the fuel too volatile.