U.S. EPA sends Midwest ethanol expansion request to White House

(Reuters) - The U.S. Environmental Protection Agency has asked the White House to approve a rule that would allow expanded sales of higher-ethanol gasoline to be sold in certain Midwestern states, after governors from those states requested it.

The request has been stalled after the oil industry warned the Biden administration that allowing E15, or gasoline with 15% ethanol, in select states would lead to supply chain issues and, therefore, higher gasoline prices.

Inflation and the health of the economy are key vulnerabilities for President Joe Biden's 2024 re-election bid.

The EPA proposed in March that E15 could be sold year-round in Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin, after the states petitioned for it. Late on Monday, it sent the proposal, which includes an effective date for all states of April 28, 2024, to the White House for final review.

Ethanol, a domestically produced alternative fuel most commonly made from corn, is cheaper by volume than gasoline. Adding more of it to the fuel mix can also lower prices by increasing overall supply.

But the U.S. government restricts sales of E15 gasoline in summer months due to environmental concerns over smog.

The ethanol industry for years has pushed to lift the restrictions on E15 sales nationwide, arguing the environmental impacts have been overstated.

Oil refiners including HF Sinclair Corp and Phillips 66, meanwhile, have warned that a patchwork approach to approving E15 sales would complicate fuel supply logistics and raise the risk of spot shortages.

Ethanol groups say they prefer a nationwide legislative fix to allow for expanded E15 sales, versus the regional approach.

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