New biofuel rules could drive a summer gas price spike

AAA on June 20 put the U.S. national average gasoline price at $3.9510 a gallon as summer driving demand hit its seasonal peak. The bigger pressure point may be policy, not the Strait of Hormuz: EPA’s March 27 Renewable Fuel Standard rule and its March 25 emergency E15 waiver have turned biofuels into part of the summer pump-price fight.

EPA’s final 2026-2027 Set 2 rule included a 70% reallocation of small refinery exemptions granted for 2023 through 2025, and the agency said the volume targets were the highest in program history. EPA said meeting them will require biodiesel and renewable diesel production and use to rise by more than 60% from 2025 levels, a jump that could tighten blending economics just as gasoline demand strengthens for the driving season.

The other lever is E15. EPA’s nationwide emergency waiver took effect for summer sales beginning May 1, overriding the usual Clean Air Act restrictions tied to Reid Vapor Pressure. EPA said the waiver was intended to prevent disruption in the fuel supply and give motorists more options at the pump. Growth Energy backed the move and said E15 can be used in 96% of cars on the road today, while the National Corn Growers Association said Congress still needs to deliver a permanent year-round fix.

Refiners say the new renewable volumes cut the other way. The American Petroleum Institute said on March 27 that it appreciated EPA’s effort to provide clarity but opposed the final rule. American Fuel & Petrochemical Manufacturers later sued over the 2026-2027 standard, calling it the most expensive regulation of Donald Trump’s second term and saying it could add 26 to 35 cents a gallon. Reuters reported that refiners warned the quotas could pile onto pump prices already moving higher because of the Iran conflict.

The crude backdrop is not trivial. The Energy Information Administration’s February 2026 Short-Term Energy Outlook projected Brent crude averaging $58 a barrel this year and U.S. motor gasoline consumption slipping about 1%. That leaves room for policy to move retail prices even if oil markets are not the only force at work. In plain terms, drivers are facing a summer in which fuel rules, blending mandates and refinery compliance costs may shape the price at the pump as much as the latest headline out of the Middle East.