One of the Trump administration’s greatest accomplishments thus far has been driving the price of oil down to levels that seem like they are straight out of the 2000s. By the end of 2025, the national average price for a gallon of gas was at a paltry $2.896, and some states were even seeing gas prices as low as $1.85. [some emphasis, links added]
Unfortunately, recent actions in Iran have negatively impacted these achievements. Shortly after the Trump administration launched strikes on Tehran, energy markets reacted, with gas prices rising over 50 cents per gallon.
Presidents sometimes need to take action abroad, even if it causes temporary discomfort at home. But when gasoline prices begin to climb, policymakers often become desperate and reach for levers to change the story.
The administration recently grabbed for one such lever: a waiver for the sale of E-15 during the summer months.
E-15, a fuel blend containing 15 percent ethanol and 85 percent gasoline, is not normally legal to sell in summer, and there has been talk about making it permanently legal to sell year-round (as opposed to the current process of the federal government offering waivers to do so).
Doing so would be a mistake: selling E-15 year-round without other reforms would trigger even higher prices at the pump, ultimately hurting consumers, small businesses, and America’s energy security.
While E-15 can be used in many modern vehicles, it does not meet the rigorous standards imposed by the Clean Air Act. As a result, it cannot be sold from June 1st to September 15th, the peak driving season, unless the president authorizes a waiver.
But there is movement in Congress to make sales year-round, eliminating the need for waivers. Given the uncertainty surrounding the energy sector amid the current geopolitical situation abroad, such a move may seem appealing, a way of quickly lowering prices.
But it could do the opposite: if used as a gateway to increase already unachievable biofuel mandates, it could lead to higher prices.
Americans imagine the oil industry to be composed of a few gigantic oil corporations. But that’s not the case. In reality, the U.S. depends upon many dozens of small and mid-sized refineries that are essential for keeping regional markets supplied and competitive.
Ensuring the cost of unachievable and ill-constructed ethanol mandates does not put these fuel manufacturers out of business is critical to keeping pump prices in check.
Fortunately, Congress has not yet moved forward with permanent year-round E-15 legalization. The proposal was dropped from a recent legislative package because the proposal would have caused more harm than good. But the push is far from over.
Big Agriculture lobbyists are still trying to ram through nationwide year-round E-15 sales without sensible reforms to the program, and supporters are likely seeking to attach year-long E-15 legislation to a must-pass piece of legislation later this year.
If they succeed, we will all pay the price at the pump.
While the policy may benefit large ethanol producers and large oil companies, it risks imposing high costs on the rest of the fuel system. It would saddle small businesses with expensive mandates, weaken parts of the U.S. refining sector, and create new instability in the fuel supply chain.
If the White House is truly looking for ways to lower gasoline prices and then keep them low, policymakers should instead consider reforms to the Renewable Fuel Standard (RFS) – a program that was introduced in the mid 2000’s and has driven up fuel prices for years.
The RFS was implemented with good intentions, but its flaws have become glaring. People have expressed concerns to President Trump’s own Environmental Protection Agency (EPA) that the RFS mandates more ethanol than can physically be mixed into the fuel supply.
Plus, it is implemented through the EPA’s creation of a complex compliance credit trading scheme, via Renewable Identification Numbers (RIN), which refiners and importers have a certain number they can generate.
This benefits large oil companies operating in every element of the fuel supply chain at the expense of mid-sized and small independent refiners.
Updating the program to diminish the impact of unachievable ethanol mandates – which artificially raise prices for consumers – could help ease pressure on fuel markets and reduce costs for consumers.
The White House is currently mulling various proposals. But Washington should resist the temptation to adopt a politically convenient quick fix that makes America’s energy system less resilient.
Legalizing E-15 by itself may seem like a quick fix, but it will only cause long-term pain.
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