President Biden took an environmentally sensitive step to lower gas prices Tuesday and said he is doing “everything within my power” to lower costs, part of a newly urgent push to show voters he’s tackling high prices on a day inflation hit its highest rate in more than 40 years.
Biden traveled to Iowa — his first venture beyond Washington or Delaware in about a month — to announce the latest in a series of policy changes and splashy events to address rising costs. Two weeks ago Biden ordered the release of a million barrels of oil a day from the Strategic Petroleum Reserve, and he has repeatedly announced efforts to smooth the global supply chain.
But Larry Summers, who served as treasury secretary under former president Barack Obama, said the administration has a limited number of options to slow rising prices. That suggests Biden and the Democrats may struggle to put any significant dent in the problem before November’s congressional elections.
“We have a serious inflation problem in the United States,” said Summers, an occasional Biden confidant. “The problem didn’t get made in a week or month, and it’s not going to be resolved quickly — or without pain.”
Summers said Biden faces a “perfect storm” fueled by what he called “macroeconomic policy errors from 2021” — a reference to what he sees as a mistaken decision to pump too much money into the economy — along with the Russian invasion of Ukraine.
“It’s an extremely difficult situation to deal with,” he said.
On Tuesday, Biden traveled to Menlo, Iowa, to announce that the Environmental Protection Agency will allow a gasoline blend known as E15, which is 15 percent ethanol, to be sold over the summer — a measure long resisted by some energy and environmental groups, but one that could help deliver short-term relief at the pump.
Speaking at the Poet ethanol plant near Des Moines, Biden said the biofuels industry could help cut energy costs, and said he knows how inflation can hurt ordinary Americans. “Everything is going up,” he said. “We need to address this challenge with the urgency it demands.”
And as he has done repeatedly in recent days, Biden blamed Russian President Vladimir Putin and the war in Ukraine for driving up food and gas prices. “Your family budget, your ability to fill up your tank — none of it should hinge on whether a dictator declares war and commits genocide a half a world away,” the president said.
While Biden had previously accused Russia of war crimes, the administration had avoided calling the attack a “genocide,” which suggests an effort to wipe out an entire nation or group.
The White House has struggled to figure out how to talk about inflation, first suggesting that it would be “transitory” since it was closely tied to the economy’s post-pandemic boom. Then officials argued that Biden’s Build Back Better legislation would drive down costs for basics such as day care and prescription drugs.
Now Biden’s team is focusing on the Russian war. A fact sheet issued by the White House on Tuesday mentioned Putin four times, using the capitalized phrase “Putin’s Price Hike” throughout. Biden also cited Putin multiple times, estimating that he had spent hundreds of hours talking to allies to coordinate efforts to restrain fuel prices and build unity against Russia.
Russia’s invasion of Ukraine came at a time when many economists were optimistic that prices would begin moderating, but energy and food prices have increased since the February invasion, given Russia’s role in producing grain, oil and natural gas.
While Biden’s trip was not explicitly political, he chose a politically important part of Iowa to visit — a district represented by Rep. Cindy Axne, one of the most vulnerable House Democrats. The president heaped praise on Axne, who attended the event, and signaled that she has a direct line to the White House.
“There was no fence at the White House high enough to keep her out,” he said.
Although Biden is not popular in Iowa, even some Republicans said Tuesday’s event — with the president announcing a move that will help the state’s farmers — could boost the congresswoman.
“This is a big deal especially for Cindy Axne,” said Lance Lillibridge, president of the Iowa Corn Growers Association. Lillibridge, a Republican farmer from Vinton, cheered Biden’s announcement Tuesday as a victory for farmers and consumers, saying it would inject more stability into the corn market and ease farmers’ ability to plan for the year ahead.
“That makes life much easier,” he said.
Sen. Charles E. Grassley (R-Iowa) also applauded the president’s move via a post on social media and urged him to make the waiver permanent. Ordinarily, E15 cannot be sold from June 1 through Sept. 15 because it creates smog, but Biden officials estimate that the move will save consumers who have access to the blend an average of 10 cents per gallon.
Tim Bardole, a Republican who voted for Donald Trump in 2020 but attended Biden’s Iowa event, praised the action. “Everything he talked about was good for rural America,” said Bardole, 54, a corn and soybean farmer from Rippey.
“I would have been happy to have more biofuel support earlier, which there wasn’t,” Bardole said. “Any support we get for biofuels helps.”
The E15 blend is currently sold in 30 states at more than 2,300 gas stations, the Energy Department has said, but there are more than 150,000 gas stations across the United States.
Some experts said the latest White House move would do little to lower consumer prices.
“The Biden administration allowing the sale of higher ethanol gas to tame costs is a political gesture more than a real solution,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth U.S. “The impact will be minimal from the perspective of medium-term price relief. But it serves as another talking point from the Biden administration as to how they are helping Americans fight inflation.”
Biden has made it clear that he hopes to make at least small political inroads into rural America, whose voters have stampeded to the GOP in recent years. The E15 waiver will probably be well received in these regions.
“It may have significant impacts politically, particularly in rural areas, which have not been supportive of Democrats in recent years,” said Robert Stavins, director of the Harvard Environmental Economics Program. Still, he added that the policy change will “likely have only minor impacts on nationwide gasoline prices.”
Some environmental advocates said privately Tuesday they were not pleased with the temporary waiver given concerns that burning ethanol worsens air pollution. But several said they are tempering their criticism in hopes that the waiver will not become permanent.
Part of Biden’s challenge is that much of the power to curb inflation rests with the Federal Reserve. The central bank has begun raising interest rates under Fed Chair Jerome H. Powell, but the impact remains unclear. “It was too late and it remains to be seen whether it’s too little,” Summers said.
The “most impactful” moves that Biden can make are policies such as lifting tariffs and expanding immigration to ease the labor market, Summers said. He also said that the administration could remove some of the government’s requirements that its suppliers use parts made in the United States.
But there will probably be scant political support for such moves.
As recently as fall, senior Democrats were still expressing cautious optimism that inflation could fade from the national discourse by the 2022 midterm elections, in time for the party to regain its footing, but that optimism is fading.
Democrats emphasize that much of the economic news is good — unemployment is down, wages are up and pandemic effects have eased. But many Americans have not seen a price surge like this in their adult lives, and inflation has dented Democrats’ poll numbers and damaged the administration’s ability to boast about an economic recovery.
An ABC News-Ipsos poll released this week found that only 29 percent of Americans approve of Biden’s handling of inflation. Rising prices have 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 confidence over 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 analyses 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.”
Meanwhile, the collapse of key pieces of Biden’s domestic agenda, because of unified GOP opposition and resistance from Democrats including Sens. Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, has complicated the president’s promise to bring relief.
The White House was pushing legislation that it argued would lower costs for housing, health care, child care and other pocketbook items, but it’s not clear that those efforts can be revived 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 economic news for the White House has been bad, however.
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 Fed is expected to act in the coming months to temper inflation with higher interest rates. Used-car prices are beginning to decline, and durable-goods costs show signs of moderating as well. Trucking and shipping capacity also appears to be up.
Aaron Klein, a former Treasury official now at the Brookings Institution, a Washington-based think tank, emphasized that substantial uncertainty surrounds the next few months, and said that makes it hard to decipher whether inflation will ease 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.”