For the people of Menlo, Iowa USA, the price at the pump has become a daily source of anxiety. With inflation at a 40-year high, President Joe Biden journeyed to corn-rich Iowa on Tuesday to announce a modest step aimed at trimming gasoline prices by about a dime a gallon at a limited number of stations by waiving rules that restrict ethanol blending.
A Small Step in a Big Crisis
His action reflects the ways Biden is deploying almost every weapon in his bureaucratic arsenal to ease price pressures. Yet the impact appears to be small and uncertain. Inflation has only accelerated in recent months, instead of fading as Biden once promised it would after the recovery from the coronavirus recession following last year’s $1.9 trillion relief package. A government report Tuesday that consumer prices jumped 8.5% in March from a year ago, the worst reading since December 1981, only deepened the political challenge for Biden and fellow Democrats ahead of this year’s midterm elections.
More than half the increase came from higher gas prices, which spiked in part because of Russia’s war in Ukraine. Costs also jumped for housing, food, and other items. Biden called the inflation report “Putin’s price hike.”
“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, referring to Russian President Vladimir Putin.
The Ethanol Waiver and Its Limits
But in his remarks at the POET biofuels facility in Menlo, west of Des Moines, Biden acknowledged that the waiver on ethanol mixes was a small step. “I’m doing everything within my power by executive orders to bring down the price,” he said. “It’s not going to solve all our problems, but it’s going to help some people.”
Most gasoline sold in the U.S. is blended with 10% ethanol, a biofuel that is currently cheaper than gas. Biden was announcing that the Environmental Protection Agency will issue an emergency waiver to allow the widespread sale of a 15% ethanol blend. That is usually prohibited between June 1 and Sept. 15 because of concerns that it adds to smog during the summer driving season.
Senior Biden administration officials said the waiver would apply only to the Midwest and South, not to Texas or other states that have not requested it. The move is temporary, covering the summer months when gas demand peaks.
Political Calculations in an Election Year
Biden had hoped Democrats could run on the low 3.6% unemployment rate and an agenda geared toward lifting the middle class. But inflation has hijacked those ambitions and given Republicans a target for criticism. Iowa Republican Party Chairman Jeff Kauffman was unsparing in his criticism of Biden’s handling of the economy and inflation. But, he said, the temporary move on ethanol was the right one.
The president’s trip to Iowa underscored the political importance of the state, which holds the first caucuses in the presidential nominating process. Yet the modest nature of the ethanol waiver highlighted the limited tools available to the administration to address price pressures that are largely driven by global factors beyond U.S. control.
What to Watch Next
Looking ahead, the administration faces a critical test in the coming months. The Environmental Protection Agency must finalize the emergency waiver before June 1, when the summer ban on higher ethanol blends typically takes effect. Meanwhile, the Federal Reserve is expected to continue raising interest rates to cool demand and bring down inflation. Whether these measures will be enough to ease the burden on American families remains uncertain, as the war in Ukraine and global supply chain disruptions continue to push prices higher. The November midterm elections will be the ultimate gauge of voter sentiment on the economy and the president’s response.
