Skip to comments.Subsidies on Domestic Ethanol & Tariffs on Imported Ethanol End
Posted on 12/27/2011 7:28:47 PM PST by mamelukesabre
Lost in the hustle and bustle of the holiday season, Congress has quietly ended subsidies on ethanol fuel as well as ending a special import tariff on Brazilian ethanol. The ethanol subsidy paid fuel blenders 45 cents per gallon to make E10, gasoline blended with 10% ethanol. The tariff added 54 cents to the cost of importing a gallon of ethanol from Brazil. The ethanol subsidy currently costs US taxpayers about $6 billion per year. Over the past 30 years, the program has cost $45 billion. By taking no action on the subsidy before adjourning for the end of the year, Congress effectively killed the program.
Though ethanol interests, like corn growers and affiliated industries, have considerable political power, a wide variety of critics, cutting across political lines, had coalesced around the issue, encouraging Congress to let the subsidy end. The food processing and livestock industries joined with environmentalists to oppose the subsidy. The policy was encouraging diversion of corn from feedlots and food processors to ethanol production, raising the cost of foodstuffs. Environmentalists, some of whom used to endorse ethanol as a biofuel, now say that its dirty because its production is carbon intense.
Ethanol trade groups have said that the industry would survive the loss of the subsidy, now that the US ethanol production industry has become established. The industry is still protected by congressional mandates that call for 15 billion gallons of renewable fuels by 2015 and 36 billion gallons by 2022.
The ethanol issue involves a number of powerful players, corn growers and affiliated industries on one side and food interests, automakers and engine builders on the other. Then theres the EPA to consider. The EPA has approved the use of E15, an 85/15 gasoline/ethanol blend, for use in post 2001 cars. Manufacturers say that without modifications, E15 will damage engines. In February, in a bipartisan move the House voted 285-136 to block the EPA from moving ahead with E15 regulations.
While ending the subsidy would seemingly discourage ethanols use, the end of the 54 cents per gallon tariff on imported Brazilian ethanol might do more to encourage that use than the subsidies did. Brazil is one place where it makes sense to use ethanol as a fuel because of Brazils huge sugar industry. The ratio of energy needed to produce it vs the energy obtained in the fuel for ethanol made from corn is barely greater than one, 1.3:1, compared to 2:1 for using sugar beets and 8:1 for sugar cane, the feedstock for Brazils ethanol. It costs half as much to make Brazilian cane ethanol as it does to make American corn ethanol. According to one academic study transportation costs to US ports eliminate that competitive advantage, but if that was a certainty, Brazilian sugar cane producers wouldnt have threatened to start a trade war if the tariff wasnt ended.
Farmers play the market, too so they have to be backing this somehow.
Washington State has Ethanol Free gas stations!
Yes, during Winter!!
12-26 to be exact.....
How do we get some of those in Colorado?
seems to me, this should knock food prices down a little
What happens with the price??
Sure would like to buy a better cut of beef again.
Wow! Now I can have nachos again.
It goes DOWN!
Ethanol costs more to make than the gas equivalent.
End US sugar cane tariffs and subsidies, too.
Lobbyist money to Newt was not high enough? You just can’t bribe fast enough.
Seriously, how can anybody, apart from Newt and other paid lobbyists, support ethanol subsidies?
I don’t see how farmers could’ve backed this. It means the end of corn based ethanol. corn can’t compete with sugar cane for ethanol production and sugar cane can’t be grown in north america.
seriously? anyone who grows corn would support it. Anyone who works at an ethanol plant would support it.
Sugar cane is grown in Florida...last time I checked, we're still in North America.
good to know. I thought only hawaii could grow it.
Corn squeezin’s should be only used to fuel human metabolic oxidation.
my dog would disagree.
The subsidy went to the blenders, the gasoline co.s, not the farmers, mills or ethanol makers. It was to sweeten the deal for the ones who least needed it, the oil co.s. Now, the same per cent ethanol blend is required by law and the oil. co.s won’t get the subsidy. The farmers, mills and ethanol makers won’t see more money and the gas price probably won’t change much. Obama will have a few extra billions he can squander elsewhere.
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