By on December 17, 2010

Both the Senate and the House have passed a one-year extension of the Volumetric Ethanol Excise Tax Credit (aka “blender’s credit”), the Small Ethanol Producer Credit and the ethanol import tariff and the Alternative Vehicle Refueling Property Tax Credit, as part of a tax bill that now needs only the President’s signature to become law. The full suite of ethanol subsidies were extended at their current levels, despite an attempt to lower the blender’s credit to 36 cents per gallon instead of 45 cents per gallon. These subsidies will cost in the neighborhood of $6b next year, keeps cheaper Brazilian ethanol out of the US market, and may inspire a WTO complaint with Brazil. And, as Senator Diane Feinstein (D-CA) puts it:

The ethanol industry is the only one to ever receive the triple crown of government intervention. Ethanol use is mandated by law, its users receive federal subsidizes and domestic production is protected by tariffs. That policy is not sustainable.

And she’s not kidding: even with these subsidies in place, ethanol plants are still losing money on each gallon they produce… and analysts are predicting record-high grain prices after the extension is signed. What’s not to love?

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17 Comments on “Ethanol Subsidy Extension Headed To White House...”

  • avatar

    The only explanation I can offer for Congress’ decision to continue these accursed ethanol giveaways is that, as they say in Chicago, “the fix is in.”

  • avatar

    Great, we can spend $6 billion to subsidize ethanol, but $7 billion to treat 9/11 first responders’ health problems is too expensive.  Our congress sucks.

    • 0 avatar

      Totally agree that first responders (from all over the country who went to help out) with one of the most slam dunk perfect cases of causality from breathing in toxic vapors causing health problems and fatalities – will not get passed b/c the good ole GOP filibustered everything so they can get the tax cut for millionaires and keep the ethanol gravy train going. Their reasoning…with Xmas vacation coming they don’t have time and want to spend it at home with their “healthy” family. Ironic b/c the GOP has for so long laid claim to 9/11 and its “heroes” – and in the end they leave them out to pasture (I’d bet if those 1st responders spent millions in lobbying to Congress something would get done).  You’d figure the best xmas gift they could give would be to help these guys out for saving lives.

  • avatar

  • avatar

    For Diane Feinstein to say that about a government program, it’s pretty bad.

  • avatar

    The ethanol industry is the only one to ever receive the triple crown of government intervention. Ethanol use is mandated by law, its users receive federal subsidizes and domestic production is protected by tariffs. That policy is not sustainable.


    Not that I’m excusing either, but when you see bipartisan support for spending you can pretty much be assured that it meets the needs of both rich social liberals and wealthy social conservatives.

  • avatar
    George B

    Many ways to kill the Corn Ethanol beast, but I’d attack the oxygenate requirement first because few people would buy corn ethanol for fuel if it wasn’t required.  For markets where there is no significant photochemical smog problem in the winter and few open-loop pollution sources like lawn mowers in operation, there is zero reason to require oxygenates in the winter blend gasoline.

    Reduce the tariff on Brazilian ethanol directly or indirectly and eventually the lower price product takes over.  I’d go the indirect route by increasing the percentage of the ethanol market that can come in with low tariffs from the Caribbean Basin Initiative countries.  Could use cheap stranded natural gas to process Brazilian ethanol to US standards.

    Once you kill corn ethanol, support for a blenders credit to use Brazilian sugar ethanol collapses.

    • 0 avatar

      I’d attack the oxygenate requirement first because few people would buy corn ethanol for fuel if it wasn’t required

      Dianne Feinstein has seen the light, and shone it to others, on this issue as well. She has tried to get the EPA to allow California to not add ethanol as an oxygenate. No luck so far.

      I’m not a big fan of Feinstein, but she sure has had the guts to lead the way on this issue. Guess when you are not a corn-state Senator, and are not running for president, you can be braver.

  • avatar

    This Ethanol business really bugs me, I don’t want to run it in my vehicle, so I buy higher-octane gas. Higher priced ,of course, as if it isn’t expensive enough already.

  • avatar

    Holy nested subsidies, batman!  It isn’t just a “triple crown”, but a quadruple.

    1) Corn growers are subsidized to grow corn
    2) Ethanol subsidies are subsizided to make ethanol
    3) Use of ethanol in gas is mandated
    4) Tariffs limit competition

    You know the GOP and dems will vote for this though.  I think we need to mover the 1st presidential caucaus somewhere else, or do them all at once.

    Jeffer: high octane gas is still 10% ethanol.

    Octane is actually one of the few ways ethanol could be used efficiently. Cars could be made to have higher compression ratios, improving efficiency, or be made smaller with high-boost turbos. Just enough ethanol would be injected when you put your foot in it to prevent detonation. Cruising and idling, you’d use cheap, low-octane gas. This would greatly improve efficiency and require FAR less ethanol than we use today. Win/win.

    • 0 avatar

      Here in South East BC, at my favorite station, regular gas has 10% ethanol, mid-grade 5% and premium has none.

    • 0 avatar

      Ah- I didn’t realize you were Canadian.  Sourry :)

    • 0 avatar

      Ethanol still has way less energy content than gasoline, and even as a octane booster it’s less efficient than traditional octane boosters like toluene.  Unfortunately even before the 10% mandate, it became the octane booster of choice because of the subsidized price.
      As a side note, has anyone noticed that after the E10 mandate, gasoline doesn’t last as long. I’ve noticed that cars run poorly after sitting just a couple of weeks, vs. several months before. The last three years, I had to drain the fuel from my snowblower in the fall to get it to run. I used to be able to start it up fine one the older fuel.

  • avatar

    Another year of “Sta-Bil” in the gas for the mower, chain saw, string trimmer, hedge trimmer, rototiller, generator, shredder, outboard, and probably two or three I can’t remember at the moment. It’s a $200 fuel system repair if ethanol-contaminated gas is left in the engine over the winter.
    Some states wisely exempt the top gas grade from requiring this pollutant. This state is not one of them.
    Anyone know what happens to babies, kids, and the environment when everyone is forced to dump Sta-Bil into every can of gas? I can’t believe it’s anything good.

  • avatar

    Am I the only one who sees that corn cob truck and immediately thinks ‘Dune worm’?

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