Saturday, March 12, 2011

Bill to Stop U.S. Ethanol Credit Needs to Pass

The bill to stop the outrageous tax credit for the destructive production of corn ethanol needs be supported and passed, which will save taxpayers $6 billion a year and get us out of a policy which is as damaging to the environment as any there is.

Congressional opponents of the $6-billion-a-year blenders credit see eliminating it as a no-brainer, while stalwart advocates are likely to put up a fight

WASHINGTON—It turns out Sens. Ben Cardin and Tom Coburn have more in common than six-letter last names that begin with the letter "C."

The Maryland Democrat and Oklahoma Republican have drawn a substantially higher number of cheers than jeers for introducing bipartisan legislation this week to repeal a tax credit on corn ethanol that could save taxpayers roughly $6 billion per year.

Both senators refer to the blenders tax credit as costly and ineffective in a joint statement. What's officially known as the Volumetric Ethanol Excise Tax Credit, or VEETC, pays 45 cents for each blended gallon.

Coburn, a conservative long known as a fiscal watchdog, labeled the ethanol tax credit as "bad economic policy, bad energy policy and bad environmental policy."

"The $6 billion we waste every year on corporate welfare should instead stay in taxpayers' pockets where it can be used to spur innovation, stimulate growth and create jobs," the conservative Oklahoman said Wednesday.

"I'm hopeful my colleagues on both sides of the aisle will take a stand against business-as-usual special interest giveaways and eliminate this wasteful and harmful subsidy."


Friday, March 4, 2011

Get Rid of Ethanol Subsidies, Save the World

America's farmers are closely eyeing commodity prices to help them decide what crops they should plant in their fields.

For American farmers, the options look great economically. Soybean futures are fetching 44 percent more than last year; wheat futures now get 69 percent more than a year ago and corn futures are up a full 92 percent.

But for buyers, especially in countries like China, India, Tunisia, Philippines, Egypt, Jordan, Indonesia and Pakistan where food is a full third or more of consumptive income, this spike in food prices is an economic crisis.

Many factors contribute to the world's food emergency. The most severe come from natural causes: drought in Argentina, China and Russia; floods in Australia, Canada and Pakistan.

But there is a set of man-made policies that is having a particularly pernicious impact on marginal world food prices while simultaneously costing the U.S. treasury more than $5 billion annually.

These are our policies to support the production and use of ethanol, a corn-based fuel. Congress provides a subsidy for every gallon of gasoline blended with ethanol. Congress also mandates its use.

It is true that ethanol provides a cleaner and environmentally safer octane boost than its alternatives. But it remains highly debatable whether it offers any net energy savings or any net environmental benefit.

Indeed, by the time one factors in all the petroleum-based inputs that go into ethanol's production and distribution (fertilizer, tilling, harvesting and shipping), David Pimentel at Cornell University estimates that it takes 1.3 gallons of oil to produce one gallon of ethanol.

And even if it takes, as some contend, a little less than a gallon of oil to produce a gallon of ethanol, that claim that ethanol provides environmental benefits becomes more questionable when one considers the water consumption, the fertilizer-laden run-off and pollution inherent in its production and distribution.

In the meantime, however, ethanol's mandated and subsidized use has tilted farmer's planting decisions towards corn. More and more corn is going to ethanol production. And consequently, less and less of what could be food supply is going to address the increasing world demand for food.

Ethanol is an inefficient substitute for petroleum. Subsidizing it not only costs the U.S. taxpayer over $5 billion each year, but it artificially incentivizes converting what could be food production into inefficient energy production at a time when the world is facing a most serious food crisis.

Getting rid of our nation's ethanol subsidy would help improve our country's balance sheet. But more importantly, it would eliminate an artificial price distortion contributing to a global food emergency.


Thursday, February 24, 2011

Grassley Rightly Say Cut Budget and Ethanol Subsidies

Cutting the deficit is more important than protecting the ethanol industry if it comes to that, says Sen. Chuck Grassley, long the biofuel industry's most powerful ally in Congress.

Grassley said Tuesday that he would vote for a deficit-cutting bill even it includes two House-passed provisions that are intended to slow the ethanol industry's growth.

"As significant as it is to me because I'm a great ethanol fan, if in fact those things were in the bill to cut the deficit ... I'd have to bite the bullet," Grassley said.

A House-passed bill would cut federal spending by $60 billion this year. It includes a measure that would block the U.S. Environmental Protection Agency from increasing the amount of ethanol that can be added to gasoline from 10 percent to 15 percent. A second measure would bar subsidies for retrofitting service stations to sell higher amounts of ethanol.

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Bill Clinton Says Ethanol Could Spark Riots

Former President Clinton added his voice to those with concerns about U.S. corn usage for ethanol production. In a major speech this morning to USDA’s Outlook Forum, Clinton warned that competition for food stock could impact food prices and spark food riots in developing countries.

Clinton, who now works on international development issues through his New York-based foundation, said that U.S. farmers need to be aware of the developing countries food needs as well as the domestic ethanol market. He acknowledged, however, the role of ethanol in reducing the U.S. dependence on imported fuels.

Clinton’s remarks drew immediate reaction from U.S. ethanol and corn production organizations. A statement from Growth Energy, a trade organization representing biofuel companies, noted, “We appreciate that President Clinton understands the important role American ethanol plays in reducing our dependence on foreign oil and strengthening our national security.

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Get Rid of Ethanol, To Consume 36 Percent of US Crop in 2011

Ethanol production is outstripping levels mandated by the government, increasing pressure on corn supplies, according to the Agriculture Department.

USDA’s chief economist, Joseph Glauber, said that that ethanol production is currently running at at more than 13.5 billion gallons on an annualized basis, well over the 12.6 billion gallons required this year by the federal renewable fuel standard. “Production margins for ethanol producers remain positive as many plants appear to have forward-priced their corn requirements below the recent market highs,” Glauber said at the USDA’s annual agricultural outlook conference.

Ethanol is likely to consume 5 billion bushels, or 36 percent, of this year’s crop.

Despite soaring corn prices and thin reserves, Agriculture Secretary Tom Vilsack told the conference there was “no reason for us to take the foot off the gas” when it comes to biofuels. “This is a great opportunity, because we can do it all. Those who suggest we cannot just simply are not betting on the American farmer and rancher.” He also pledged to aggressively push to increase U.S. ag exports.

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