Biden Pushes Gasoline Prices Even Higher at the Pump

November 22, 2021

In a Wall Street Journal piece by Andrew Wheeler, former administrator of the Environmental Protection Agency (EPA), Mr. Wheeler points out how the Biden administration has continued to aggravate the energy crisis.

Gasoline prices are the highest they have been in seven years and inflation is at a 30-year high, a double hit to American families. The Biden administration has aggravated the situation with new regulatory requirements on oil and gas producers as well as limits on domestic oil and gas exploration. But policy inaction also costs Americans at the pump. Consider the Biden administration’s failure to make decisions on the Renewable Fuels Standard (RFS).

The EPA in consultation with the Department of Energy, sets the annual volumes of renewable fuel to be blended into the nation’s fuel supply under the RFS. In 2007 Congress set the general RFS parameters into law, but the specific annual volume targets must be set by regulation for each coming year before that year begins.

The law also allows an economic-hardship waiver for small refineries—those with an average capacity of under 75,000 barrels of oil a day. These small refineries typically serve regional and niche markets, such as the Rocky Mountain States or rural areas like West Virginia. Their share of the gasoline supply cannot typically be replaced, without additional costs, by other refineries.

Last year the EPA was delayed in setting 2021 annual renewable-fuel volumes because the sharp decline in gasoline consumption due to Covid-19 made it impossible to provide projections of 2021 gasoline sales by the November deadline. The Trump administration in 2020 extended the compliance deadlines under the program to stabilize the gasoline market in the pandemic.

The Biden administration, however, has inexplicably delayed decisions on the waivers and proposals for the annual volumes for 2021 and 2022 under the RFS. Gasoline consumption returned to pre-Covid levels months ago, and the government has had five months to implement the Supreme Court decision. The EPA could and should have set the 2021 renewable-fuel volumes earlier this year. Decisions on the 2019 small-refinery hardship petitions could and should already have been made as well, as the Energy Department completed the technical analysis supporting decisions on the petitions in 2020. These petitions are typically received and acted upon following the compliance year once the refineries and DOE have the economic data.

More than two dozen small refineries applied for hardship waivers for the 2019 compliance year. While the Biden administration has yet to decide on the applications, these small refineries face an impossible deadline within a few weeks. Absent a waiver, refiners must purchase renewable fuel credits, which are equivalent to a gallon of renewable fuel, from refiners who have blended renewable fuel in quantities above their annual obligation. As of today, there are almost no 2019 credits left and the cost of those available has risen exponentially from $0.20 at the end of 2019 to over $1.50 this past August. Prices of credits have more than doubled since the beginning of this administration.

Due to the delay in making the small-refinery decisions, many small refineries face crippling penalties with high costs. Smaller refineries can’t eat the higher costs, and many will have to cut jobs, often in places where good-paying jobs are hard to find. This will also add costs to producing domestic gasoline and will increase prices at the pump even higher.

With each week of delay, refineries and markets have less time to prepare and the prices get pushed up at the pump. The Biden administration continues to make American household energy prices skyrocket with policies and inaction, all the while taking away more American energy jobs.