Trump's Latest Gasoline Move Could Cut Prices-and Increase Smog

Dow Jones
Yesterday

The Trump administration's latest move to tamp down gasoline prices could cut 10 to 30 cents a gallon in early September, though the effect is unlikely to last long.

The Environmental Protection Agency is allowing gas stations to switch to cheaper winter-grade gasoline starting on Sept. 1, rather than waiting until mid-September as they usually do. The average gasoline price is $4.11 per gallon, about $1 above a year ago, according to AAA.

The EPA will allow refiners to sell E10, a gasoline blend containing 10% ethanol. Winter-grade gasoline can contain more volatile components, including butane, which helps fuel evaporate more easily in colder temperatures. It is also cheaper to produce.

The EPA said its relaxed rules could allow stations to sell hundreds of thousands of extra barrels of gas per day, potentially reducing prices. Winter fuel can be 10 to 30 cents cheaper than summer fuel, according to AAA.

The earlier switch comes with an environmental trade-off. Because winter-grade gasoline evaporates more readily than summer fuel, it can contribute to increased smog. The government normally requires stations to stick to heavier and less-volatile gasoline blends in the summer for environmental reasons.

The EPA's fuel waiver applies nationally, but states often have tougher requirements. California and New York, for instance, haven't waived many of their gasoline rules this year, despite federal approval to do so.

Even in states that adopt the new EPA standards, consumers may only see modest relief from high prices. Oil and fuel supplies have been strained by the wars in Iran and Ukraine, a major factor keeping prices elevated. Refiners like Valero and Marathon Petroleum are making very high margins on the fuel they sell amid elevated prices at the pump.

 

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