Gasoline Waivers Loosen Smog Rules as Pump Prices Stay Above $4

A Supply Fix Aimed at a Price Problem

The Trump administration keeps using the same tool against high gasoline prices: emergency fuel waivers that relax the clean-air rules governing what can be sold at the pump. In late August, the Environmental Protection Agency said refiners and retailers could switch to cheaper, more volatile winter-grade gasoline on Sept. 1, about two weeks before the usual date38. Since then the agency has kept renewing waivers that suspend federal enforcement of state "boutique" fuel requirements in Arizona and California, granting the full 20 days the Clean Air Act allows33. On Oct. 5, at the request of Texas Gov. Greg Abbott, it also suspended Texas's low-emission diesel standard and its ultra-low-sulfur diesel rules for 20 days43.

The administration says this is a straightforward supply decision. According to the EPA, the early switch to winter fuel would add "hundreds of thousands" of barrels a day to domestic gasoline supply38. Energy Secretary Chris Wright put it simply: more gasoline means lower prices for families35. Critics warn that the cost will show up as smog. Their concern is the same chemistry that summer fuel rules were written to control.

Both sides have a point. The evidence suggests the waivers can trim prices at the margin. But the main force behind prices this year is crude oil, and none of these waivers changes that.

Where Prices Actually Stand

The figures from the past week tell a consistent story. AAA put the national average for regular at $4.36 a gallon on Oct. 8. That was about 5 cents lower than a week earlier but well above the $3.12 recorded a year ago108. AAA says 2026 is the first year the national average has stayed above $4 in October, and prices remain at a record for this time of year10. September averaged $4.33, which AAA says was 50 cents above the previous September record, set in 20239.

The EIA's weekly survey, which runs on a different schedule, found nearly the same thing: $4.354 on Oct. 5, down 11.1 cents from $4.465 on Sept. 289. Some outlets reporting a "current" average near $4.47 are using the late-September EIA reading rather than newer data4, so the gap between reported numbers comes from timing, not a real disagreement.

Taking a slightly longer view, a LendingTree analysis of AAA data put the national average 39.4% above a year earlier. It also found the average 2.5% below the year's high of $4.48 in May2. Diesel has risen much more, up about 72% from a year ago to $6.322.

The regional differences matter most for judging the waivers. California averaged $6.34 on Oct. 8 and Ohio averaged $3.71, a gap of $2.6389. That gap is more than twice the $1.25 rise in the national average over the past year9. Arizona, the other state covered by the boutique-fuel waivers, averaged $4.74, up 34.4% from a year earlier.

Crude Oil Is Doing the Heavy Lifting

Crude oil drives these prices, and nearly every account agrees on why. Reporting ties the price spike to the U.S. conflict with Iran and the disruption of tanker traffic through the Strait of Hormuz3819. Brent crude topped $108 a barrel on Sept. 28, when the administration also announced weaker fuel-economy standards16. AAA said U.S. crude briefly fell into the $80s and then rose back above $9010.

Oil quotes this week vary depending on when they were taken. West Texas Intermediate settled at $88.28 on Oct. 71. One price tracker later listed WTI near $92 and Brent near $1055, and another put WTI at $91.85 and Brent at $104.42 as of Oct. 927. However the timing works out, U.S. crude is roughly $90 and Brent is around $100 or more. The EIA put the crude-oil cost in a gallon of gasoline at about $2.00 using an August WTI price6. That cost reaches every state's fuel, regardless of which blend rules apply.

Natural gas shows how specific the problem is. Henry Hub spot prices stayed near $3 per million British thermal units in early October, and the St. Louis Fed's data series showed $3.03 on Oct. 621. Futures closed around $3.23 on Oct. 9, and the market is down about 10.6% for the year25. The EIA's October outlook expects Henry Hub to average $3.16 in 2027, 9% below 2026. The 2026 average was pushed up by a January spike after Winter Storm Fern30. Executives responding to the Dallas Fed's energy survey expected about $3.29 by the end of 202623.

In other words, American energy prices are not rising across the board. U.S. natural gas is plentiful, with storage above the five-year average24, while oil is still disrupted by the war. A waiver on gasoline blends can't fix a crude shortage. At most, it can ease bottlenecks in refining and distribution that make the crude shortage worse.

What the Waivers Actually Change

The 2026 waivers began on March 25. The EPA cited extreme and unusual supply conditions linked to the Middle East and allowed E15, a 15% ethanol blend, to be sold nationwide starting May 131. The agency then renewed the waivers about every 20 days. That is the statutory limit for each waiver, so a long relief period requires a series of back-to-back waivers32. The waivers created a single national gasoline pool with 9% to 15% ethanol at a common volatility limit of 10 psi. They also restored the 1-psi ethanol allowance in states that had removed it33.

The Aug. 20 action went further. It extended the volatility waiver through Aug. 31. Starting Sept. 1, it waived all federal volatility standards and moved the winter limits forward33.

When the waivers began, analysts estimated savings of 10 to 25 cents a gallon in parts of the country. That would offset only part of the war-driven increase37. The administration has not offered a better measure of the effect. The EPA said its waivers had lowered prices in states that changed their own blending rules. It also blamed "blue-state politicians" in New York and California for keeping their residents' prices high35. That partisan claim is difficult to check against the data. California's price reflects high state fuel taxes, which one breakdown puts at 73.6 cents a gallon, along with its separate fuel market, not only its fuel standards6.

Timing matters too. Analysts said pump prices would not fall on Sept. 1 because stations need up to 10 days to sell off their summer fuel35. Instead, the national average was $4.15 a month before Oct. 8, so prices rose about 21 cents during the period when the early-winter-fuel policy should have been helping9. Crude prices, not the fuel waivers, explain most of that increase.

The Smog Side of the Ledger

The environmental concern is direct. The Clean Air Act limits gasoline volatility because volatile organic compounds evaporate faster in heat and help form ground-level ozone, the main component of smog31. Winter-grade fuel contains more volatile, inexpensive additives such as butane. In hot weather, those blends evaporate from vehicle tanks and fuel stations and add to ozone35. Refiners tend to like the early switch for the same reason: blending in butane lowers the cost of making each gallon35. Environmental groups have also warned that higher ethanol blends can make warm-weather ozone worse35.

The timing is especially notable in the Southwest. California's and Arizona's boutique fuels exist to reduce regional smog during warm months35. Analysts tracking natural gas reported unusually hot late-season weather across the West in early October, enough to raise Southern California gas prices to $4.6523. Relaxing evaporation limits there during a heat wave is exactly the scenario the rules were written to prevent.

The waivers also fit a wider pattern. On Sept. 28, the administration finalized fuel-economy standards that set the fleet target at 34.9 miles per gallon by 2031. The Biden-era rules had aimed for 50.4 mpg14. Experts estimate the rollback will add 4,870 tons a year of smog-forming pollutants and 90 tons of soot13. California and nearly two dozen other states have sued. They argue in part that the administration ignored the cost of oil price shocks18. The EPA also said this week that it plans to weaken methane rules for oil and gas operations34.

The Bottom Line

The administration presents each step as relief for consumers, and the waivers probably do free up some supply in the short term. But the coverage points to a lopsided trade. The price benefits are small and hard to see compared with crude-driven swings of 20 cents or more in a month. The air-quality costs fall on specific regions and grow during heat waves.

The EIA still expects gasoline to average $3.91 for 2026 and $3.56 in 20272. If that happens, the main reason will be lower crude prices after the Iran conflict ends, not the gasoline blend rules. Until then, these waivers allow more smog-forming fuel while doing little to change the oil prices that set what drivers pay.