Biden may remove another smog-related mandate to lower gasoline prices

May 23, 2022 8:32 PM ETVLO, XOM, MPCBy: SA News Team151 Comments

Gas Prices Remain Historically High As War In Ukraine Rages On

Win McNamee/Getty Images News

  • Regulations mandate US oil refiners do not blend low-cost products like butane into the gasoline pool during summer, as the blended components increase smog.
  • However, the Biden Administration is reportedly considering a suspension of the mandate, in a move that could lead to lower prices at the pump.
  • The requirement, part of the Clean Air Acts of 1990, has been waived at different times in recent decades, to alleviate regional supply issues following hurricanes, and manage winter-blend fuel stocks during the covid-19 pandemic.
  • The suspension would follow on the heels of the Administration's decision to waive the 10% ethanol blending cap, a separate policy designed to reduce smog during the summer months.
  • While blending additional food into the gasoline pool carries a cost for consumers, removing the regulatory blending burden for all gasoline grades is likely to be viewed favorably by consumers and investors.
  • In an over-supplied gasoline market, the likes of which most US consumers have enjoyed for several decades, reduced refining costs are generally passed through to consumers; however, given current dynamics, it's a bit less clear if the policy measure will reduce prices at the pump, or if refiners like Valero (VLO), Marathon (MPC) and Exxon (XOM) will capture the benefits of reduced costs for investors.

Recommended For You

Comments (151)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.