Washington Eases Gasoline Rules as Iran Pressure Campaign Jolts Fuel Costs

Washington is tightening the screws on Iran and loosening the rules on gasoline at the same time as Americans are paying more than $4 a gallon.The Environmental Protection Agency on Thursday authorized an early switch to cheaper winter-grade gasoline, allowing sales of gasoline blended with 10% ethanol beginning September 1 rather than waiting for the normal mid-September seasonal transition.The administration says ending summer-blend requirements early could add hundreds of thousands of barrels per day to domestic gasoline supply and provide some relief at the pump.Average U.S. gasoline prices have remained above $4 per gallon since mid-July, according to AAA, roughly $1 higher than when the Iran war began, and the highest Americans have ever paid this late in the year.The waiver came the same day Treasury Secretary Scott Bessent promised the “toughest sanctions in history” against Iran, adding another layer to Washington’s increasingly awkward effort to squeeze Tehran without squeezing American motorists along with it.Bessent told CNBC the new sanctions would accompany the existing U.S. blockade and urged other countries, including China, to cooperate. He also said oil markets were misinterpreting the pressure campaign and questioned why prices had jumped following the announcement.Oil traders apparently remain less convinced that tougher sanctions on an oil producer during a six-month war are inherently bearish.The Energy Department already expects elevated fuel prices to persist through year-end after revising its outlook higher as Washington and Tehran failed to reach an agreement reopening the Strait of Hormuz.EPA’s waiver removes summertime low-volatility gasoline requirements intended to reduce smog, although state-level fuel rules could limit how quickly additional supply reaches some markets.It is the latest attempt to claw back supply wherever Washington can find it. The administration has also temporarily eased Jones Act shipping restrictions and allowed broader sales of higher-ethanol E15 gasoline this summer.None of those measures reopens Hormuz, but Washington is working around that considerably larger problem one gasoline rule at a time.By Julianne Geiger for Oilprice.comMore Top Reads From Oilprice.comIraq-Syria Oil Pipeline to Bypass Hormuz Is 4 Years and $15 Billion AwayChina's Renewables Boom Faces Record Clean Power Curtailments$100 Diesel Cracks Signal a Much Tighter Oil Market Than Brent Suggests