Inflation spurs new White House gas policy

The White House plans to roll out new Tuesday policies aimed at curbing gas prices as it braces for a crushing new report that will show inflationary pressures on millions of Americans have intensified this year.

President Biden will announce plans for the Environmental Protection Agency to allow a blended form of gasoline that uses ethanol, known as E15, to be sold this summer — a measure long resisted by some energy and environmental groups that could help deliver short-term relief at the pump.

The administration will do this by having the EPA issue an emergency waiver for the summer sale of E15. Typically, E15 cannot be sold in most of the country between June 1 and Sept. 15 because of air pollution rules. The White House has argued that the use of E15 can shave 10 cents off each gallon of gasoline. E15 is currently sold in 30 states at more than 2,300 gas stations, the Energy Department has said, but that is just a fraction of the more than 150,000 gas stations in the United States.

The news will come during a day the president is set to visit the Poet ethanol plant near Des Moines as the administration pushes Congress to approve new energy subsidies aimed at reducing US dependence on foreign fossil fuels.

The flurry of activity around gas prices will come just hours after the federal government is scheduled to release an inflation report that could show prices rising by as much as 8 percent relative to last year, despite the Biden administration’s months-long efforts to bring inflation down . High prices have emerged as a nettlesome political problem for the White House, lowering Biden’s popularity even as the United States sees a boom in job growth and economic output.

White House press secretary Jen Psaki attempted to preempt criticism over the new inflation report on Monday by blaming “Putin’s price hike.” Russia’s invasion of Ukraine ordered by President Vladimir Putin came at a time when many economists were optimistic that prices would begin to moderate, but energy and food prices have moved higher since the February invasion, given Russia’s centrality in providing those global commodities.

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Biden gets a strong jobs report, but a sour mood still prevails.

The White House has tried for weeks to blame the surging gas prices on Russia while also seeking to advance policies that Biden and his advisers have said could offer some temporary relief. Last month, Biden announced the White House would release 1 million barrels of oil each day from the Strategic Petroleum Reserve in order to try to push prices down over the next several months.

The White House’s attempts to deflect blame may prove insufficient politically. As recently as this fall, senior Democrats were still expressing cautious optimism that inflation could fade from the national discourse by the 2022 midterm elections and in time for the party to recover its footing. That optimism is fading. Inflation appears to have sunk Democrats’ poll numbers, damaged the administration’s boasts over the economic recovery, and even hurt Biden’s legacy by creating new roadblocks to his domestic policy agenda in Congress.

Although international in scope, inflation has emerged as the issue Americans see as the single most important problem facing the country. But they are also unconvinced that politicians in Washington — including Biden — have the answers to solving it, according to polling experts. Inflation is bad internationally but higher in the United States, which approved more in fiscal relief programs and enjoyed economic growth than many European countries.

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An ABC News-Ipsos poll released this week found that only 29 percent of Americans approve of Biden’s handling of inflation. Inflation has emerged as the issue Americans see as the country’s most important challenge, according to Gallup, and the University of Michigan’s consumer sentiment survey has reported a 30 percent drop in the past year.

“I think the economic backdrop is as dark as it has been since the start of the administration,” said Mark Zandi, an economist whose analyzes are frequently cited by the White House. “It’s just a very, very dark and deep problem. … There’s nothing more pernicious on the collective psyche than having to pay more. And it’s only set to get worse.”

The White House has attempted to show it is doing everything possible to fight inflation, including tackling the nation’s supply chain woes and advocating for Biden’s domestic agenda to lower costs. But the collapse of key pieces of Biden’s domestic agenda due to disagreements with Sen. Joe Manchin III (DW.Va.) complicates their promises to bring relief.

The White House had legislative plans to lower costs for housing, health care, child care and other pocketbook items, but a lack of support from Republicans and Manchin has appeared to derail those efforts this year. Biden’s expanded Child Tax Credit also expired because of opposition from Republicans and Manchin, depriving tens of millions of American families of a monthly check even as prices rise.

Not all the news for the White House is bad.

The average price for a gallon of gas was $4.11 on Monday, according to AAA, down from $4.33 a month ago. There is some evidence that supply chain bottlenecks are beginning to ease, and the Federal Reserve is expected to act in the coming months to temper inflation with higher interest rates. Used car prices are beginning to decline, and the cost of durable goods shows signs of moderating as well. Trucking and shipping capacity also appears to be up.

Two White House officials, speaking on the condition of anonymity to describe administration strategy, said the administration is trying to make its focus on lowering costs a centerpiece of its agenda. They also said to expect a greater emphasis on the White House on Republicans’ agenda, which the administration believes will contrast unfavorably to their plans to lower prices. White House officials have repeatedly seized on a plan by Sen. Rick Scott’s (R-Fla.) to impose a minimum federal income tax on tens of millions of Americans.

The administration officials also said inflation appears to be moderating when energy and food prices are removed, although that distinction is unlikely to be persuasive to many voters.

Aaron Klein, a former Treasury now at the Brookings Institution, a Washington-based think tank official, eased the next few months that substantial uncertainty surrounds that make it hard to decipher whether inflation will ahead of the midterms.

“We don’t know when war in Europe is going to end; we don’t know when covid is going to be adjusted for; we don’t know when the global supply chain will adjust to the periodic covid flare-ups that seem to be a hallmark of the new normal,” Klein said. “We just don’t know.”

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