- Joe Biden announces measures to lower gas prices.
- US president seeks to tamp down rising inflation.
- Federal government plans to loosen ethanol regulation.
President Joe Biden will visit Iowa, a corn-producing state, on Tuesday to announce that he will suspend a federal regulation that prohibits the sale of gasoline with a higher percentage of ethanol during the summer. This is part of an effort to reduce the price of fuel that has been increasing because of the war in Ukraine, according to CNN and the AP.
Most gasoline sold in the United States contains 10% ethanol. The Environmental Protection Agency (EPA) will issue an emergency exemption to allow the sale of gasoline with up to 15% ethanol, which is usually prohibited between June 1 and September 15 due to fears that it causes environmental pollution.
WILL THE NEW RULE LOWER GAS PRICES?
The administration claims that the measure will reduce the price of gasoline by about 10 cents per gallon at 2,300 gas stations in the country. Most of those gas stations are in the Midwest and South, including Texas, according to industry groups.
The decision comes on the same day that it was announced that inflation in the United States rose 8.5% annually in March, its highest year-on-year increase since 1981. If not resolved, this could bring terrible consequences for people’s pocketbooks and the economy.
SOLVING ONE PROBLEM BY CREATING ANOTHER?
Government officials say the environmental agency has evaluated the measure and determined that it most likely will not significantly alter air quality. However, environmental groups insist that an increase in ethanol in gasoline will cause more pollution.
Biden is scheduled to announce the move at a biofuels company in Menlo, Iowa, west of Des Moines. Iowa is biggest corn producing state in the US, an essential ingredient for ethanol. This is the latest attempt by the administration to stabilize world energy markets, which have been shaken since Russia invaded Ukraine. Filed Under: Joe Biden Gas Price
WHAT WILL BIDEN DO?
Last month, the president announced that the United States will release one million barrels a day of oil from its strategic reserve over the next six months. The Biden administration contends that helped push down slightly on gasoline prices, which averaged $4.23 a gallon at the end of March compared with $2.87 the same month last year, according to the American Automobile Association. (AAA).
“This is not only a huge win for drivers and for the nation’s energy security, but also for cleaner gasoline options and a better economy in rural areas,” Emily Skor, CEO of Growth Energy, an association of biofuel companies, said in a statement. Lawmakers from both parties had called on Biden to grant the exemption for ethanol gasoline. Filed Under: Joe Biden Gas Price
IS THE WORST COMING?
The increase in inflation in the last 12 months in the United States has been the highest in the last 40 years. The prices of food, gasoline and housing, among others, weigh on consumers and eliminate the salary increases that many people have received.
The Labor Department said Tuesday that its consumer price index rose 8.5% in March from a year earlier, the highest annual increase since December 1981. The rise in prices is due to strangled supply chains, demand and disruptions to global food and energy markets aggravated by Russia’s war against Ukraine. Filed Under: Joe Biden Gas Price
IS THE US ECONOMY GETTING WORSE?
The government report also reveals that inflation increased 1.2% between February and March, compared to 0.8% from January to February. The March figures are the first to fully capture the rise in gasoline prices following the Russian invasion of Ukraine, which began on February 24.
The West has responded to Moscow’s brutal attacks, which have disrupted global food and energy markets, with sanctions on the Russian economy. According to AAA, the average price of a gallon (3.8 liters) of gasoline has increased 43% to $4.10 from last year, although it has fallen in recent weeks.
WHY ARE PRODUCTS MORE EXPENSIVE?
Photo: Getty Images
The escalation in fuel prices has caused increases in the cost of transporting food and other goods throughout the economy. This has translated into increases in consumer prices, not only in the United States but throughout the world. Mexico is no exception.
The latest evidence of accelerating prices supports the expectation that the Federal Reserve will aggressively raise interest rates in the coming months to try to stop lending and tame inflation. Financial markets are expecting much larger rate hikes than Fed officials had anticipated last month.
WHAT HAPPENS WHEN PRICES GO UP?
The increase in prices due to the increased cost of gasoline is not exclusive to the United States. Mexico is currently experiencing a similar situation, since almost all service and goods have become more expensive.
Consumers are the big losers, since they often have no choice but to cut back on buying when their finances are already stretched too thin. This also affects build long-term savings.
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