By on June 17, 2011

Cracks continued to in the ethanol industry’s once-impregnable political vanguard, as the San Francisco Chronicle reports that the Senate has voted to roll back the Volumetric Ethanol Excise Tax Credit (VEETC) as well as import tariffs on foreign-produced ethanol. This rollback of multi-billion-dollar ethanol credits failed earlier in the week, when the Detroit News reports automakers came out in opposition of a bill that would have required that 95% of all cars built in the US be capable of running 85% ethanol by 2017. The Senate did fail to pass a repeal of a government ethanol blending mandate that underpins the VEETC, however, and funding is moving forward for ethanol blending pumps. Still, the Senate’s repeal of VEETC alone means taxpayers could save over $5b per year on subsidies, and as one expert puts it

“Looks like we’re going to be relying on the biofuels mandates to make sure blenders use biofuels, rather than bribing them to use it with $6 billion,” [Bruce Babcock, professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State University] said.

In fact, Babcock thinks killing the subsidy could help ethanol because it would come out from the stigma of being a subsidized industry. And removing the subsidy may strengthen support for the mandate, and the tariff on imports.

Over to you, House of Representatives…

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15 Comments on “Senate Votes To Repeal Ethanol Tax Credits...”


  • avatar
    panzerfaust

    Nothing new here the US House of Representatives is keeping true ot it’s traditional formula for economics; “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. “

  • avatar

    The Democrats in the Senate should keep doing this.

    Attack from above. Pass legislation coached in precisely the language that sells it to Republicans (end the deadbeats suckling at the government subsidies!) which, when they pass it, will completely screw them over with their base (the ones doing the suckling).

    Don’t get me wrong, I don’t like Ethanol at all, and I like the subsidies even less. Let’s end the Sugar Tariffs and get it back into soda where it belongs as well!

    • 0 avatar
      paul_y

      HFCS pretty much wouldn’t exist without the imported sugar tariff, as well as (and this is critical) our subsidization of the corn industry in general. Those two things combined keep HFCS at under half the price of sucrose.

      Yes, HFCS tastes like crap and basically shouldn’t exist. No, it’s no worse for you than sucrose (empty calories are empty calories are empty calories). I say this as a food scientist, not so much a corn-industry shill.

      …and the biggest supporters of corn subsidies are the reddest-of-red states whom, as far as I can ascertain, are basically the ‘keep your government hands off my medicare’ crowd that has no understanding of irony whatsoever.

  • avatar
    tparkit

    As long as the ethanol mandate remains, the citizenry will continue to subsidize ethanol producers — except it will now be done at the pump. Unfortunately, that fact means a senator or representative can reap the PR benefits of voting against ethanol subsidies all the while knowing little has changed.

    The real news here is that ethanol has officially lost its halo, and it’s ok for a politician to publicly oppose ethanol without being destroyed by the greenwave conspiracy. That means the mandates themselves will now in the crosshairs, and the public conversation will begin.

  • avatar
    FloridaSteve

    It’s still picking winners instead of letting them emerge. If you end the subsidies but not the mandates then all you’re doing is passing the cost directly to the consumer. How about letting the best fuels win. Period. End ALL subsidies and tariffs.

  • avatar
    ixim

    All the greenies I know loathe ethanol; mostly b/c of the small net gain in energy; also b/c of the diversion of food into gas tanks. Here’s hoping the blending requirement dies, too.

  • avatar
    Contrarian

    The most important question for me is “When will they take that crap out of my gasoline”? And corn-state pols of both parties need to get slapped for this environmental and economic ripoff. Just goes to show how K-Street is actually the fourth and most powerful branch of the US Government.

  • avatar
    ExPatBrit

    How about the political parties moving the first Presidential Primaries out of these corn states also.

    Put it in a different state (or group of states) every 4 years, that would be great for both parties and reduce the pandering.

    • 0 avatar
      Ubermensch

      How about lazy voters in the other 49 states going to the polls instead of letting us in Iowa decide the president for them.

      • 0 avatar
        ExPatBrit

        That would be great but by the time I get to vote in WA state 3/4 of the Democratic or Republican have dropped out due to being culled by the Iowans and other states.

        I never get to vote for the candidate I want only the limited selection you decide is worthy to move on.

        That’s not really democracy, that’s more American Idol!

  • avatar

    Meanwhile in Germany: Government-mandated E10 gas is heavily opposed by drivers. According to an ADAC study 85% won’t use it, 40% because not being convinced of environmental improvements, 36% fearing long-term damage, 10% fearing increased consumption. Prices for E10 are lowered now to increase the E10 appeal.

  • avatar
    Southerner

    As with all govt. subsidies, edicts, or nudges—however benign they seem, or well intentioned: I just want to scream, NO MORE! Please beltway people, no more.

  • avatar
    WRohrl

    While traveling in South Dakota a few weeks ago, I noticed that MID-Grade was CHEAPER than the regular grade. Premium was still higher. I was not able to confirm it definitively, but it appeared that the regular did not contain ethanol while the mid-grade did. I’ve never seen mid-grade cheaper than regular, can someone confirm what is going on in South Dakota? This was not a freak occurrence at one gas station but noted consistently at many stations across different brands all the way from the Wyoming border to the Mt. Rushmore area.


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