CERAWEEK-US suspends anti-smog fuel rules in bid to ease pump prices

By Jarrett Renshaw

HOUSTON, March 25 (Reuters) - President Donald Trump's administration announced on Wednesday it will temporarily suspend federal anti-smog regulations on seasonal gasoline blends to combat higher pump prices since the start of the war on Iran.

The move by the Environmental Protection Agency is a win for the U.S. biofuels industry because it will allow retailers to sell formulations of gasoline including blends with 15% ethanol – known as E15 – that are typically not permitted during warmer months. The waiver takes effect for 20 days starting May 1, and can be extended if needed, the agency said.

"We foresee potential for a disruption to the American fuel supply," EPA Administrator Lee Zeldin said at a press conference on the sidelines of the CERAWeek energy conference in Houston, at which he announced the waiver.

An EPA press release said the waiver temporarily suspends seasonal low-volatility requirements on gasoline and lifts blending limitations. That effectively allows nationwide sales of E15 and also removes "all federal impediments to selling E10, gasoline blended with 10 percent ethanol, across the country," the release said. E10 is already widely available year-round.

Analysts said the change could shave several cents per gallon off retail prices. The U.S. average price for a gallon of regular gasoline is running just over $3.98, up more than a dollar from a month ago, according to data from AAA.

The Renewable Fuels Association, which represents the ethanol industry, said it welcomed the administration's decision, adding it would help drivers and growers of corn and other feedstocks for ethanol.

"At a time of rising gasoline prices, year-round sales of E15 will help American drivers save money at the pump, strengthen the rural economy, and boost energy independence," it said.

The oil industry's top trade group, the American Petroleum Institute, also welcomed the announcement.

"By temporarily easing summer fuel requirements, this action helps ensure American consumers continue to have access to affordable, reliable energy," said Will Hupman, API's vice president of downstream policy.

Global oil prices LCOc1 have surged since the start of the U.S. and Israeli war against Iran as the conflict blocks shipments through the Strait of Hormuz, the conduit for a fifth of world crude and liquefied natural gas supply.

The White House is trying to contain the economic and political fallout from the war. It has already announced a release of crude oil from U.S. emergency stockpiles and the easing of sanctions on both Russia and Iran to make more of their oil available to the market.