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Oil Likely To Hit $200: SEB Group

Biden Considers Waiving Summer Gasoline Smog Rules To Help Ease Prices

The U.S. Administration is weighing the possibility of waiving the rules that limit components in gasoline that contribute to smog in the summer in another attempt to help lower prices at the pump, Reuters reports, citing sources taking part in the discussions.

The U.S. Environmental Protection Agency (EPA) regulates the vapor pressure of gasoline sold at retail stations during the summer ozone season between June 1 and September 15. Under the current rules, refiners and gasoline blenders are required to avoid using components that contribute to smog in the summer months by raising the Reid vapor pressure (RVP) of gasoline.  

Now the White House is looking at waiving those RVP requirements, which would allow refiners to blend more polluting but lower-cost components in the summer gasoline sold in the United States.

The Biden Administration already allowed last month E15 gasoline—gasoline that uses a 15 percent ethanol blend—to be sold this summer, to bring relief at the pump to U.S. households.

The U.S. typically restricts the sale of the 15-percent ethanol-gasoline blends during the summer driving season because of concerns that it would increase smog in hot weather.

Hopes were that the higher ethanol content could potentially lead to lower gasoline prices because ethanol is now cheaper than straight gasoline out of the refinery.

However, resilient demand, multi-year low fuel inventories, lower refinery capacity than before COVID, and, of course, high international crude oil prices have sent U.S. gasoline prices spiking further in the month after the E15 gasoline waiver. On May 24, the average nationwide price set another record, at $4.598 per gallon, according to AAA data. In recent weeks, gasoline prices have been setting records every single day.

Commenting on the possibility of an RVP waiver for all summer gasoline blends, Patrick De Haan, head of petroleum analysis for fuel-savings app GasBuddy, said, “If all things held the same, this could bring 15-25c/gal of relief, less for smaller/rural areas, more for larger cities where regs are more stringent. But more importantly, it could limit spikes in #gasprices if refinery issues happen.”  

By Tsvetana Paraskova for Oilprice.com

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