Ethanol subsidies targeted for budget savings?

posted at 3:35 pm on April 18, 2011 by Ed Morrissey

With sacred cows like Medicare and Medicaid suddenly up for discussion in terms of budget cuts, Republicans in Congress want to take aim at another — and it’s going to be a toss-up to see which draws more demagogic fire.  The GOP wants to defund ethanol subsidies, which would save $60 billion in ten years, and Senator Tom Coburn wants to end a critical tax credit as well:

The federal government has given a nearly $6 billion tax credit to American producers of the bio-fuel every year since 2005, and doled out additional billions in special grants and loan guarantees for more than 30 years.

Now a growing number of lawmakers, including several from agricultural states, say it’s time for at least some of the special treatment to end.

“I’ve talked to ethanol people. I’ve said that this is something that’s got to make economic sense,” Indiana RepublicanSen. Dan Coats told ABC News of the tax credits he’s previously fought to defend. …

Oklahoma Sen. Tom Coburn, who’s part of the bipartisan “gang of six” working to solve the budget crisis, has proposed immediately eliminating the 45-cents-a-gallon tax credit. The move would, in effect, force ethanol producers to pay more in taxes and give the government a $4 billion boost in revenue through the end of this year.

“Ethanol subsidies are a spending program wrongly placed in the tax code that increases the burden of government, keeps tax rates artificially high, and forces consumers to pay more for food and energy,” Coburn said in a letter last month in response to criticism from an anti-tax group.

Assuming that the tax credit stays in place, it will have cost us almost $31 billion since it began in 2005.  Even if the credit made sense, a GAO report from March explained that the time has passed for it.  The industry needed to make the product price competitive while it invested heavily in its capital infrastructure, but that investment has come and gone.  Now those credits work as a purely winner-picking mechanism that makes ethanol falsely competitive with other energy sources.

But can the GOP summon the courage to end the program?  The White House will almost certainly cast this as an attack on farmers, and some farmers may well agree.  Iowa voters will put pressure on Republican presidential candidates to oppose the cuts, as the subsidies and tax credits benefit farmers while driving up food prices.  Ben Nelson in Nebraska and Claire McCaskill in Missouri may not have much chance of winning another term in the Senate, but they may start flogging the subsidies as a lever to rescue their prospects among rural voters. Even apart from the farm vote, Barack Obama will undoubtedly hammer Republicans as tools of Big Oil attempting to put an end to the green energy Nirvana that awaits just around the next big-government-program corner.

We should be cutting ethanol subsidies — and a lot of other subsidies as well.  This is as good a place to start as any.


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Ethanol subsidies are a long dead echo of times past. They should have been deleted years ago, but no one has the political courage to do so.

neoavatara on April 18, 2011 at 3:36 PM

screw Iowa and all those Huckabites. Stop living off the gov. subsidies.

hanzblinx on April 18, 2011 at 3:38 PM

But can the GOP summon the courage to end the program?

most likely not….

all talkie, not action thus far from this group….

cmsinaz on April 18, 2011 at 3:39 PM

Even apart from the farm vote, Barack Obama will undoubtedly hammer Republicans as tools of Big Oil attempting to put an end to the green energy Nirvana that awaits just around the next big-government-program corner.

We should be cutting ethanol subsidies — and a lot of other subsidies as well.

Yes… including some of the “Big Oil” subsidies. Then, the first problem you mention would be lessened. Couple them, if possible.

Abby Adams on April 18, 2011 at 3:40 PM

Corn (black) hole.

Joe Mama on April 18, 2011 at 3:40 PM

“But can the GOP summon the courage to end the program?”

BBBBBWWWWWWWAAAAAAAAAAAHAHAHAHAHAHAHAHAHA…!!!

(gasp… chortle… choke)

Stop it Ed…

… You’re killing me!

Seven Percent Solution on April 18, 2011 at 3:41 PM

Cut them. Cut them all.

Count to 10 on April 18, 2011 at 3:43 PM

We should be cutting ethanol subsidies — and a lot of other subsidies as well. This is as good a place to start as any.

Let’s make a pact now: any presidential contender who panders on ethanol subsidies in IA is out.

Kataklysmic on April 18, 2011 at 3:44 PM

We should be cutting ethanol subsidies — and a lot of other subsidies as well. This is as good a place to start as any.

Chuck Grassley will have a cow if they try and pull this.

Ethanol subsidies are his baby.

Knucklehead on April 18, 2011 at 3:44 PM

Throw the rest of the USDA in with that.

We should not be subsidizing people not to grow food nor large corporations on pricing. Get rid of this horrific agency, it is a costly boondoggle that begins to rival the entitlements… because it is corporate welfare and social engineering.

Do not fund the entire thing.

ajacksonian on April 18, 2011 at 3:45 PM

So where are Daniels and Pawlenty on this? These are their states.

sharrukin on April 18, 2011 at 3:46 PM

Using corn for fuel, and simultaneously making food more expensive in the third world, creates a much bigger problem that it solves. If you create political instability in the third world, you haven’t made energy less expensive. You’ve destabilized markets and made it more expensive.

RBMN on April 18, 2011 at 3:47 PM

Let’s make a pact now: any presidential contender who panders on ethanol subsidies in IA is out.

Kataklysmic on April 18, 2011 at 3:44 PM

+1

Count to 10 on April 18, 2011 at 3:47 PM

So how about we cut the quota for the use of ethanol in cars?
If we end ethanol subsidies without cutting the quota then price at the pump will increase.

topdog on April 18, 2011 at 3:47 PM

don’t you mean SACRED PORK????

SDarchitect on April 18, 2011 at 3:48 PM

Ethanol was proved not useful in the early 1900s, because of costs. Like peanut oil for diesel it went the way of the dinosaur, until liberals rediscovered a way to make fuel cost more.

tarpon on April 18, 2011 at 3:48 PM

I’d rather have our food and oil come from the US. Ethanol come from Brazil, if we can get rid of the import restrictions/regulations.

Keith_Indy on April 18, 2011 at 3:48 PM

Mohair.

Rebar on April 18, 2011 at 3:49 PM

If Repubs can’t defund Big Agra they have no business doing the people’s work.

Aquateen Hungerforce on April 18, 2011 at 3:50 PM

The Ethanol/Corn mandates in the 2007 Energy Bill, along with last summers drought in Russia, have more than antyhing to do with current Rising Food prices. Drastically effecting supply/demand…while other foods such as Rice cost the same today as they have the last several years.

Increased Corn production, has made farmers produce less wheat….these are foods used to raise cattle and connected to many other food related crops.

They need to push to repeal asap the 2007 Energy Bill, it would be a huge relief to tax payers and consumers.

jp on April 18, 2011 at 3:51 PM

Now those credits work as a purely winner-picking mechanism that makes ethanol falsely competitive with other energy sources.

Which is just what Barry wants. He also wants you to believe that ethanol is ‘competitive’. And those subsidies do NOTHING to encourage those companies to produce at even cheaper costs.

GarandFan on April 18, 2011 at 3:51 PM

Whoever comes in last in Iowa (presumably because they want Iowans to grow up and get off the govt. teat) will probably get my vote.

Aquateen Hungerforce on April 18, 2011 at 3:51 PM

We should be cutting ethanol subsidies — and a lot of other subsidies as well. This is as good a place to start as any.

This’ll surely boost the sales of them Chevy Volts, right?

Oh noes…!!!

ted c on April 18, 2011 at 3:52 PM

Using corn for fuel, and simultaneously making food more expensive in the third world,

Ah…we don’t have to look that far afield anymore.

tree hugging sister on April 18, 2011 at 3:53 PM

We’re moving to Iowa next month, where Mrs9000 is from and where her family (mostly) resides. We’re both against ANY subsidies of ANY sort. We’ve rented a home right next to a corn field!

I imagine our popularity will resound among her liberal family, and quite probably our new neighbors. It will get even better when I fire up the Harley early on a Sunday morning to go to Mass.

I look forward to sharing the love.

karl9000 on April 18, 2011 at 3:55 PM

I have posted many times in the past on Ethanol on Hot Air. I favor its use and promotion mainly because as time and technology moves forward, Ethanol has a chance to help us unwind from the Middle East’s control of our economy.

Here and now, I will be willing to cut this if the rest of you are willing to cut your pet subsidies and “tax expenditures”.

I would also say how disappointed in Ed I am on seeing him use President Obama’s Orwellian premise the tax credits/cuts/loopholes are “costing us” money. I thought we all agreed that anything that lowers the bite of Government taxation was a good thing…

Sinner on April 18, 2011 at 3:57 PM

The good folks at Archer Daniels Midland are not going to be happy with you, Ed.

Kafir on April 18, 2011 at 3:58 PM

I look forward to sharing the love.

karl9000 on April 18, 2011 at 3:55 PM

where in Iowa are you headed?

ted c on April 18, 2011 at 4:00 PM

We’ve rented a home right next to a corn field!

of course you did (there are no other kinds in Iowa)./

ted c on April 18, 2011 at 4:00 PM

This’ll surely boost the sales of them Chevy Volts, right?

Oh noes…!!!

ted c on April 18, 2011 at 3:52 PM

I had forgotten that batter charging sometimes involves risk of electrical fire.

Count to 10 on April 18, 2011 at 4:01 PM

If you end ethanol subsidies you also have to end ethanol use-mandates, otherwise the mandate to use ethanol in gasoline means that the subsidy is moved from the government to consumers.

slickwillie2001 on April 18, 2011 at 4:01 PM

screw Iowa and all those Huckabites. Stop living off the gov. subsidies.

hanzblinx on April 18, 2011 at 3:38 PM

Actually, it’s not just Iowa. The State O’bama claims to have been born in also gets ethanol subsidies, as State Law there requires all gas sold there to be 10% ethanol. They are making ethanol out there from Sugar Cane, and the University of Hawaii professional research grant suckups are also looking into algae as an ethanol source.

Del Dolemonte on April 18, 2011 at 4:03 PM

I would also say how disappointed in Ed I am on seeing him use President Obama’s Orwellian premise the tax credits/cuts/loopholes are “costing us” money. I thought we all agreed that anything that lowers the bite of Government taxation was a good thing…

Sinner on April 18, 2011 at 3:57 PM

That’s just it: all “credits” and “deductions” are more rightfully placed on the expenditure side of the ledger. In order to see the true level of government spending, we should be adding their value to the rest if it.

Count to 10 on April 18, 2011 at 4:04 PM

Once we get a balanced budget amendment, the choice will be easy.

Ethanol? Shut it down.

pedestrian on April 18, 2011 at 4:04 PM

If Hawaii had the first-in-the-nation primary, we would be making ethanol out of pineapples. This is vote buying, plain and simple. We can’t afford it anymore.

Haiku Guy on April 18, 2011 at 4:05 PM

As long as Iowa has such a prominent place in the primaries, noone who is entertaining running for office, will go on record against Ethanol subsidies.

Best way to make it easy for them, is just let some other state be first instead of Iowa.

firepilot on April 18, 2011 at 4:06 PM

If you end ethanol subsidies you also have to end ethanol use-mandates, otherwise the mandate to use ethanol in gasoline means that the subsidy is moved from the government to consumers.

slickwillie2001 on April 18, 2011 at 4:01 PM

What mandate is that? I don’t use Ethanol in any of my vehicles – I buy pure gas. I pay 10 cents more per gallon for it – but no one’s making me buy Ethanol.

HondaV65 on April 18, 2011 at 4:07 PM

What mandate is that? I don’t use Ethanol in any of my vehicles – I buy pure gas. I pay 10 cents more per gallon for it – but no one’s making me buy Ethanol.

HondaV65 on April 18, 2011 at 4:07 PM

I don’t know. In Maryland, all the pumps are 10%, no choice given.

Count to 10 on April 18, 2011 at 4:08 PM

Ethanol is nothing but a boondoggle. From start to finish, it takes more than gallon of gas to produce a gallon of ethanol. Also, in the process of producing ethanol, they use large quantities of water and during the fermentation of the corn to produce the alcohol, a lot of CO2 is released into the air. This last point is a poke in the eye of the global warmers.

Mirimichi on April 18, 2011 at 4:08 PM

I understand that farm real estate and rental prices have risen largely because of the Ethanol subsidies. Even the cost of machinery has been changed… so if somebody put lots of money into a couple of huge new combines and then they cut off the subsidies…

There are many many ways these subsidies have effected our economy and even the world’s food supplies.

I don’t want them but I do think they will cause lots of disruption when they stop.

The government still subsidizes tobacco too right? At the same time it campaigns against smoking?

Farm subsidies are complicated things. We want to be sure we aren’t dependent on other countries for food so we try to take the risk out of farming. And I do sort of understand and support that idea.

But as farms get bigger that leaves the government subsidising huge agribusinesses.

Farming is a throw of the dice lots of times though… so many factors beyond the control of farmers, like weather all over the world, the policies of other countries and their subsidies, the cost of borrowing, diseases, pests, the EPA suddenly deciding something is causing problems, tariffs…

petunia on April 18, 2011 at 4:09 PM

Ethanol, another bad idea that should be eliminated along with “designer” gasoline blends! I drive eleven miles one way to purchase non-ethanol gas!

GFW on April 18, 2011 at 4:10 PM

If ever you needed a reason for Iowa to not be the first in the nation caucus, this should be Exhibit A.

JohnGalt23 on April 18, 2011 at 4:10 PM

That sacred cow tastes like a veggie burger.

shick on April 18, 2011 at 4:11 PM

the Ethanol Mandates to be in our Gasoline, increase every year since the 2007 Energy Bill. We are now getting into the unreasonable portion, which is a huge reason Corn prices(and gas) are skyrocketing along with most foods in general.

jp on April 18, 2011 at 4:11 PM

Let’s make a pact now: any presidential contender who panders on ethanol subsidies in IA is out.

Kataklysmic on April 18, 2011 at 3:44 PM

Sounds good to me.

Of course that would leave Ron Paul and… ???

JohnGalt23 on April 18, 2011 at 4:12 PM

Texas needs to be the first Primary…..then both parties would Love Oil

jp on April 18, 2011 at 4:12 PM

First ethanol, then sugar!
Republicans should make lowering everyday costs: energy and food, a cornerstone of their campaigns

Iblis on April 18, 2011 at 4:13 PM

petunia on April 18, 2011 at 4:09 PM

Just like with the mortgage interest deduction, everybody’s got their favorite entitlement.

Count to 10 on April 18, 2011 at 4:14 PM

What mandate is that? I don’t use Ethanol in any of my vehicles – I buy pure gas. I pay 10 cents more per gallon for it – but no one’s making me buy Ethanol.

HondaV65 on April 18, 2011 at 4:07 PM

the 2007 Energy Bill mandated, that each year more and more Ethanol be used as additives in our Gasoline.

We use to use MTBE(a chemical) as the addiditive but the Environmentalist have forced its removal and it was replaced with Ethanol.

jp on April 18, 2011 at 4:14 PM

Hey wait a second – just thought of something.

Let me say first – whatever the cost – I’m all for ending this subsidy NOW.

But will most Americans?

With Gas approaching $4.00 per gallon – pulling the government out of subsidizing ethanol will result in an about a 10 cent increase per gallon – immediately.

Unless I’m wrong.

See – I buy NON-Ethanol gas now and it’a about 10 cents per gallon more expensive than Ethanol fuels like E10. Now – the reason that E10 is cheaper is because of the government subsidy on Ethanol – right?

Without tha subsidy – then E10 is on par with the non-ethanol I’m buying now – actually, E10 may be more expensive without the government subsidy. I suspect that would be the death of E10 and hooray for that but …

Going back to pure gas means paying the prices I’m paying now – maybe slightly less since it will be shipped in bulk and most production lines will be re-configured to produce non-ethanol gas. Difficult to say – but without Big Obama Warbucks contributing to the subsidy – gas will go up.

HondaV65 on April 18, 2011 at 4:14 PM

Texas needs to be the first Primary…..then both parties would Love Oil

jp on April 18, 2011 at 4:12 PM

What effect would that have on the illegal immigration debate?

Count to 10 on April 18, 2011 at 4:15 PM

JohnGalt23 on April 18, 2011 at 4:10 PM

amen

cmsinaz on April 18, 2011 at 4:15 PM

We use to use MTBE(a chemical) as the addiditive but the Environmentalist have forced its removal and it was replaced with Ethanol.

jp on April 18, 2011 at 4:14 PM

I’m not saying you are wrong – but if that’s true – how am I buying PURE gas (no ethanol) right now?

HondaV65 on April 18, 2011 at 4:15 PM

ted c on April 18, 2011 at 4:00 PM

Just outside Cedar Rapids: Mount Vernon.

karl9000 on April 18, 2011 at 4:17 PM

Big Ag, Big Biz, Big Pharma, Big Gov, cut them all.

j_galt on April 18, 2011 at 4:19 PM

Lose the subsidies. Now.

J.E. Dyer on April 18, 2011 at 4:19 PM

Ethanol is an abomination in that we are burning food (and using more fuel to produce it than it generates). It is a major reason for hikes in worldwide food prices and I can tell you from my charity work in Africa, people are starving to death because of it.

Now to unleash domestic drilling to make up for the ‘loss’ (actually gain) from the end of ethanol subsidies.

michaelo on April 18, 2011 at 4:19 PM

I’m not saying you are wrong – but if that’s true – how am I buying PURE gas (no ethanol) right now?

HondaV65 on April 18, 2011 at 4:15 PM

I think, but not 100%, that all gas has additives and they went from MTBE to using Ethanol about 4yrs ago.

The US has a mandate for about 9 billion barrels of Ethanol to be used this year…by 2022 its 22 Billion I think.

jp on April 18, 2011 at 4:20 PM

here:

http://www.seco.cpa.state.tx.us/re_ethanol_mtbe.htm

MTBE & Ethanol

After MTBE was proven to be a carcinogenic groundwater pollutant, many states banned MTBE, which accelerated the use of ethanol as the only economically feasible fuel additive for states with air quality problems. The Energy Policy Act of 2005 further accelerated the demise of MTBE in that gasoline marketers were no longer required to use an oxygenate, but they also did not receive the MTBE liability protection that they had petitioned for. This put refiners at a liability risk if they continued to use MTBE after an oxygenate was no longer required by law. Predictably, the demand for ethanol increased at unprecedented rates as most refiners replaced MTBE with ethanol.

Even though refiners were not obligated to use an oxygenate after May 6, 2006, most of them switched from MTBE to ethanol primarily for these reasons:
There still exists EPA emissions control requirements. Adding oxygen to gasoline allows for more complete combustion of the fuel, which reduces exhaust emissions of CO (carbon monoxide), which can result in lower levels of toxic, ozone-forming pollutants and greenhouse gases, especially if higher-level ethanol blends are used.

Ethanol has the advantages of MTBE without the same dangers, and it contains 35 percent oxygen by weight, twice the oxygen content of MTBE. Ethanol is the highest-octane fuel in the market. Because it doesn’t leave gummy deposits, it helps to keep the vehicle’s fuel system clean for optimal performance.

Ethanol extends gasoline supplies. Because its production is encouraged by a federal tax credit of 51 cents per gallon, ethanol is economically attractive. Without this credit, it would not be as competitive.

jp on April 18, 2011 at 4:22 PM

With Gas approaching $4.00 per gallon – pulling the government out of subsidizing ethanol will result in an about a 10 cent increase per gallon – immediately.

HondaV65 on April 18, 2011 at 4:14 PM

I’m not sure that’s the case.

But even if it is, remember, doing so would also mean a reduction in food prices.

JohnGalt23 on April 18, 2011 at 4:23 PM

But can the GOP summon the courage to end the program?

most likely not….

all talkie, not action thus far from this group….

cmsinaz on April 18, 2011 at 3:39 PM

Our one ‘Superstar’ Rand Paul, went off the rails saying he’ll vote for extending the debt ceiling for a balanced budget amendment that has zero chance of passing.

We’re boned.

catmman on April 18, 2011 at 4:23 PM

I can’t wait to hear my farmer neighbors bit@h abt this. And I’m going to laugh in their faces bcs they are nothing but govt whores. Begging for govt subsidies.
I want all agriculture off of subsidies.
Let them compete. And for that matter, get the feds the hell out of the way when it comes to producing food!

Badger40 on April 18, 2011 at 4:25 PM

Even apart from the farm vote, Barack Obama will undoubtedly hammer Republicans as tools of Big Oil attempting to put an end to the green energy Nirvana that awaits just around the next big-government-program corner.

It would make it hard to argue that case if the GOP calls for ending oil subsidies too. I doubt they have the guts to end either one though.

mizflame98 on April 18, 2011 at 4:26 PM

Chuck Grassley will have a cow if they try and pull this.

Ethanol subsidies are his baby.

Knucklehead on April 18, 2011 at 3:44 PM

Chuck Grassley birthed a calf?

TugboatPhil on April 18, 2011 at 4:29 PM

What about tobacco subsidies.

Why in the world does the government still pay out subsidies for a crop that they hate?

Cinematicfilm on April 18, 2011 at 4:29 PM

Just like with the mortgage interest deduction, everybody’s got their favorite entitlement.

Count to 10 on April 18, 2011 at 4:14 PM

Exactly! And when they say this is going to effect the overall economy they are right.

I live close to farm country and know lots of farmers and the price of farm land is higher… a lot higher because of subsidies and the price of other comodies too, because when you can get a subsidized price for corn the opportunity cost of growing wheat is higher. So the price of wheat goes up.

And the companies like John Deere etc., have made production decisions based on a projected demand for machinery so they are effected by the subsidies too… and that all just trickles down into businesses in towns and all kinds of places.

I wish it had been thought better. There is no way to subsidize an industry without making it nearly impossible to stop.

It will have to be phases down I think or it will cause havock.

I want it gone. I just know that it has caused a lot of people to make financial desicisions they wouldn’t have made otherwise and so it will be painful to stop.

I guess we could start paying people not to grow corn the way we do wheat some years… and maybe not to make combines? Or produce fertilizer… that will make oil prices go down… really it is all so stupid.

It’s all a hornets nest when government starts to dictate from above.

petunia on April 18, 2011 at 4:30 PM

HondaV65 (and others):

“Gasoline” is not the name of a single substance. It’s a mixture of various different hydrocarbons. If they change the mix that’s produced at the refinery, they can get different characteristics, including different octane ratings.

The processes for getting higher octane rating decrease the amount produced per barrel of oil. Oil companies wanted to use additives instead of changing the process, because then they can use a high-yield process to produce lots of gasoline cheaply, then increase the octane rating with the additive.

The pure gas you’re buying (me, too) is a product of the lower-yield process, so it’s more expensive — but without the subsidy, 10% ethanol would be more expensive than low-yield, high-octane gas. If the subsidy goes away the oil companies would prefer to bring more “pure” high-octane fuel production on line rather than buy ethanol, because it would be cheaper. They might also add just enough ethanol to bring the octane up, that is, use it as an additive — but that would only be 2 or 3%, not 10%, let alone 15%. That would give us gas at the same price now or a little cheaper, because oil companies could back off on the process a bit and depend on the ethanol additive to bring the octane up.

Regards,
Ric

warlocketx on April 18, 2011 at 4:31 PM

In my fondest wishes, politicians start competing with each other to cut programs. And I’m ok if they do so form a selfish perspective. The Iowa Senator can give up corn subsidies if the California Senator gives up green energy subsidies and the WV Senator gives up coal subsidies (if there are any?) The end result would be a win-win-win, because without government interference, smaller competitors can thrive.

hawksruleva on April 18, 2011 at 4:31 PM

catmman on April 18, 2011 at 4:23 PM

*sigh*

cmsinaz on April 18, 2011 at 4:31 PM

We use to use MTBE(a chemical) as the addiditive but the Environmentalist have forced its removal and it was replaced with Ethanol.

jp on April 18, 2011 at 4:14 PM

I’m not saying you are wrong – but if that’s true – how am I buying PURE gas (no ethanol) right now?

HondaV65 on April 18, 2011 at 4:15 PM

Are you sure you are?
http://news.yahoo.com/s/ap/20110121/ap_on_re_us/us_epa_ethanol

mizflame98 on April 18, 2011 at 4:32 PM

The problem with pre-oxidizing fuel for modern, computer controlled, fuel injected vehicles is: they are made to get the best efficiency for the fuel mix, meaning they add MORE oxygen into the combustion chamber as fuel injection gets a cleaner and more thorough burn. There are some Mercedes and BMWs that cannot be imported because they will not tolerate the low energy efficiency of ethanol mixed gasoline. And your car would get better fuel economy with standard gas, than with ethanol mixed gas due to fuel injection and computer controls.

Pre-oxygenating fuels was a remedy for a problem solved by technology. Now we have the solution that isn’t solving anything.

ajacksonian on April 18, 2011 at 4:32 PM

The pure gas you’re buying (me, too) is a product of the lower-yield process, so it’s more expensive — but without the subsidy, 10% ethanol would be more expensive than low-yield, high-octane gas. If the subsidy goes away the oil companies would prefer to bring more “pure” high-octane fuel production on line rather than buy ethanol, because it would be cheaper. They might also add just enough ethanol to bring the octane up, that is, use it as an additive — but that would only be 2 or 3%, not 10%, let alone 15%. That would give us gas at the same price now or a little cheaper, because oil companies could back off on the process a bit and depend on the ethanol additive to bring the octane up.

Regards,
Ric

warlocketx on April 18, 2011 at 4:31 PM

Good stuff. Of course, the impact on corn prices might be noticable, too. And subsidies in general are a misuse of government money. If Richard Bransom wants to put up ethanol money, fine. But I don’t want my tax dollars to go there.

hawksruleva on April 18, 2011 at 4:33 PM

Note to farmers. You think that subsidies are an Epic Win for you. But on balance, you’d be wrong.

hawksruleva on April 18, 2011 at 4:35 PM

warlocketx on April 18, 2011 at 4:31 PM

Okay – thanks for explaining that!

HondaV65 on April 18, 2011 at 4:35 PM

I think Trent Lott is working overtime. He is the one who said that when the new members of congress get there, they will co-opt them.

Nothing is ever going to change out there in that DC swamp.

Mirimichi on April 18, 2011 at 4:36 PM

We have an obesity problem in this country.
It ain’t the waste-line or fat kids

Kini on April 18, 2011 at 4:36 PM

screw Iowa and all those Huckabites. Stop living off the gov. subsidies.

hanzblinx on April 18, 2011 at 3:38 PM

How nice of you to lump ALL Iowans as leeches and huckabucks.

Stop ALL subsidies(not just farmers) and let the chips fall where they may. Farmers will do all right they produce FOOD. Government Ethanol plants will whine, Private Ethanol plants not as much. Farmers do not NEED Ethanol plants, but they do need a free market. Take away all the Government interference along with the subsidies. Farmers are forced to take subsidies due to Government regulations on their business (what to grow,where to grow, how to grow, what animals to produce, what they are fed, how many, how they are housed, how much to sale for, etc.) Add to this “Death Taxes” that devastate family farms due to the seemingly enormous amount of “wealth” they have is all invested in land and equipment. It is a miracle there are still family farms. Thanks for collectively dismissing and stereo typing Iowans.

IowaWoman on April 18, 2011 at 4:37 PM

Are you sure you are?
http://news.yahoo.com/s/ap/20110121/ap_on_re_us/us_epa_ethanol

mizflame98 on April 18, 2011 at 4:32 PM

LOL … Yes – I’m sure. :D

HondaV65 on April 18, 2011 at 4:38 PM

Use Gore as the spokesperson for this. He admitted it was terrible, but only supported it to try to get elected. People need to realize how the Democrats lie to get a certain group to vote for them. Obama with the debt ceiling and Biden on impeaching Bush if he didn’t get Congressional support to invade Iran.

djaymick on April 18, 2011 at 4:42 PM

We should phase out all tax credits. Corporate ones are a good place to start. The IRS should collect taxes, not spend moneys to distort markets.

Farmers will do all right regardless considering the rising prices of food and the global suffering and instability that this fuels.

Laurence on April 18, 2011 at 4:48 PM

We passed HB374 in the New Hampshire House banning the sale of gasoline containing corn-based ethanol in New Hampshire – to take effect as soon as at least two of the six New England states enact such measures.

Corn should be cooked on the cob, popped, or distilled. Keep it the hell out of my gas tank.

Bruce MacMahon on April 18, 2011 at 4:49 PM

Pretty sure a signing statement can fix all of this.

Who would have thought that back in 1998 when the line item veto was considered unconstitutional, that all Clinton had to do was issue signing statements?

As Justice Stevens wrote at the time

“this act gives the president the unilateral power to change the text of duly enacted statutes,”

“the functional equivalent of partial repeals of acts of Congress,”

“there is no provision in the Constitution that authorizes the president to enact, to amend or to repeal statutes,”

Who’s willing to take Obama to court over his signing statement on the czars?

If not, then it doesn’t matter what Congress passes into law, Obama can just as easily say that ethanol subsidies are best decided by his “Green Jobs Czar”, therefore he can issue a signing statement nullifying anything Congress has done.

ButterflyDragon on April 18, 2011 at 4:53 PM

If Hawaii had the first-in-the-nation primary, we would be making ethanol out of pineapples. This is vote buying, plain and simple. We can’t afford it anymore.

Haiku Guy on April 18, 2011 at 4:05 PM

See my post just before yours. Hawai’i is making ethanol from sugar cane. They don’t grow many pineapples out there any more. Del Monte gave up growing them there a few years ago because it was cheaper to buy pineapples on the spot market than grown them in a State controlled by Democrat regulations.

As a result, the State only produces 2% of the world’s pineapple supply now-all grown on Mau’i.

When I passed thru the HNL airport on my way home a few years ago, I spotted some for sale in the duty free shop. Damned things cost $16 apiece!

Del Dolemonte on April 18, 2011 at 4:54 PM

Just outside Cedar Rapids: Mount Vernon.

karl9000 on April 18, 2011 at 4:17 PM

I had a practice in Marion for 17 years. Many clients from Mount Vernon. You’ll like it there.

a capella on April 18, 2011 at 4:54 PM

a capella on April 18, 2011 at 4:54 PM

Yeah, I just wish the circumstances were better. We’re losing our house in Utah; foreclosure. I’m pursuing a dream of being a market trader, and while it’s starting to work out, it didn’t get there soon enough to avoid what’s happening. So it goes.

We’re renting a much smaller house in Mt Vernon. OK, if it’s part of the process God wants us to go through to get to success, so be it. It won’t be forever, and we’ll be back even stronger than we were before. And I won’t have to work FOR someone else!

Jan’s mom live in Marion. The area looks nice but, darn it, there aren’t any mountains! I love mountains.

Oh well…

karl9000 on April 18, 2011 at 5:01 PM

Food prices are skyrocketing thanks in part to this insanity.

angryed on April 18, 2011 at 5:02 PM

Don’t lump me in with the crazy Iowans who want subsidies. Subsidies are just welfare for different people and once you get them hooked on the cash, you’ve got their vote. I agree though that Grassley won’t have the cajones to go along with this.

Free Indeed on April 18, 2011 at 5:10 PM

Two observations, made a few years ago, on corn ethanol:

If it were all that good a deal, the big oil companies would be stumbling all over each other to nail down the market, and prices for the stuff would be through the roof already as production lagged behind demand…if it were that good a substitute for petroleum.

If it were all that good a deal, then why is government pretty much the sole major “investor” in the corn ethanol techologies?

Not much has changed over the past few years, except that just about every product in the United States that has corn as part of the development/production chain has seen major increases in prices. Beef, chicken, milk, candy bars, soft drinks, breakfast cereals, the list is enormously long…since all are competing for corn with the government subsidized corn ethanol producers.

When we see the US Navy fueling up US fighter jets on carriers out to sea with corn-based ethanol…maybe you might make a believer of me…but that ain’t gonna happen.

Dump the subsidies…now.

If the product is worth it, then the private sector will make it happen.

Enough of these “investments” on the part of government.

They are graft, nothing less.

coldwarrior on April 18, 2011 at 5:20 PM

Ethanol!
Hey I know lets use 21 pounds of food (corn) to make one gallon of ethanol!

To produce 1 liter of ethanol, it requires about 500 liters of water.

500 liters of water = 131 gallon of water (in case little Ricky Sanchez is reading)

131 gallons of water to make .264 gallon of fuel (ethanol)
or 524 gallons of water to make 1 gallon ethanol, got it?

21 pounds of food (corn) + 524 gallon of water to make 1 gallon ethanol, got it?

So what does it take to fill up a 20 gallon gas tank with ethanol?

10,480 gallons water and 420lbs corn to produce 20 gallons of ethanol!

This is just for the raw materials and doesn’t take into account what it takes to get those raw materials.

Oil?
One 42 gallon barrel of crude oil produces, after refining, about 19.5 gallons of gasoline.
Along with heating oil, petrol chemicals and stuff.

DSchoen on April 18, 2011 at 5:23 PM

Yes… including some of the “Big Oil” subsidies. Then, the first problem you mention would be lessened. Couple them, if possible.

Abby Adams on April 18, 2011 at 3:40 PM

Ah, the Big Oil Subsidies. The ones that give oil companies some of the same tax advantages as every other industry in this country has, like depreciation of assets.

This canard gets tossed around a lot, and I’ve yet to see anyone define exactly what these “subsidies” really are, especially when oil companies pay a heck of a lot more in taxes than they make in profits, and are one of (if not the) highest taxed industries in the US. Oil companies make about 10 cents on a gallon of gasoline. The government makes 45 to 80+ cents per gallon. Subsidies?

Meanwhile, ethanol is a net energy loser, it takes more to make a gallon than is contained in a gallon, and it is subsidized both on the corn production end, and in the production of the ethanol. Equating oil with ethanol is flat out ignorant. Note, I did not say stupid, just ignorant, as in spectacularly uninformed.

iurockhead on April 18, 2011 at 5:25 PM

Iowa voters will put pressure on Republican presidential candidates …

… which is yet another reason why our primary process/sequence is utter BS.

I’m sick to death of a couple of states deciding who our candidate is going to be before most of the conservative/republican voters get a chance to express their opinion.

Midas on April 18, 2011 at 5:32 PM

With the possibility of a global food shortage becoming a distinct possibility, bringing corn back to the food chain seems alot more intelligent that forcing subsidies to those who clearly know it was never a feasible solution for which it was presented.

volsense on April 18, 2011 at 5:35 PM

Ending the subsidies without ending the EPA mandates for using ethanol as a fuel oxygenator is dumb, REAL DUMB. There will be a huge political backlash as ethanol is still required and will come from elsewhere.

It was the EPA mandates which actually put the ethanol industry into business much more than the subsidies.

End that mandate and the subsidies will dry up as there will be no market for the ethanol produced. The industry will be dead in the water.

Kermit on April 18, 2011 at 5:36 PM

Unless you’re a farmer with no debt, unlimited riches, etc., you are pretty much forced now to accept govt subsidies, i.e. crop payments.
There are also some subsidies in livestock i.e. wool payments.

The federal govt then ends up setting the price for land rents & prices in agriculture.
It has already done that in the health care industry with Medicare.
We are ALL accepting govt subsidies bcs we all buy some kind of food product.
So enjoy your food subsidy when you ahve your next meal.
As a rancher, the only govt $$ I have so far accepted is 2 disaster payments, couple of years apart, and we have some agriculture loans backed by the feds.
We do not participate in cost sharing for things like tree wind breaks etc. like a lot of other farmers & ranchers do around here.
ut i will tell you that it makes things really tough when you want to rent some pasture (which is in finite supply) & you have to compete with the federal govt for it bcs they’re [paying Farmer Joe $40/acre to put it into CRP.
This crap has to end.

Badger40 on April 18, 2011 at 5:38 PM

It was the EPA mandates which actually put the ethanol industry into business much more than the subsidies.

End that mandate and the subsidies will dry up as there will be no market for the ethanol produced. The industry will be dead in the water.

Kermit on April 18, 2011 at 5:36 PM

THIS.

Badger40 on April 18, 2011 at 5:39 PM

Who’s willing to take Obama to court over his signing statement on the czars?

If not, then it doesn’t matter what Congress passes into law, Obama can just as easily say that ethanol subsidies are best decided by his “Green Jobs Czar”, therefore he can issue a signing statement nullifying anything Congress has done.

ButterflyDragon on April 18, 2011 at 4:53 PM

Tellin’ ya – this is but another in a list of outright tyrannical acts. The Constitution is meaningless at this point.

Midas on April 18, 2011 at 5:51 PM

Pre-oxygenating fuels was a remedy for a problem solved by technology. Now we have the solution that isn’t solving anything.
ajacksonian on April 18, 2011 at 4:32 PM

This is why we should power our cars with liquid Oxygen and Liquid Hydrogen!

Makes more sense than burning food!

DSchoen on April 18, 2011 at 6:05 PM

Stop ALL subsidies(not just farmers) and let the chips fall where they may. Farmers will do all right they produce FOOD. Government Ethanol plants will whine, Private Ethanol plants not as much. Farmers do not NEED Ethanol plants, but they do need a free market. Take away all the Government interference along with the subsidies. Farmers are forced to take subsidies due to Government regulations on their business (what to grow,where to grow, how to grow, what animals to produce, what they are fed, how many, how they are housed, how much to sale for, etc.) Add to this “Death Taxes” that devastate family farms due to the seemingly enormous amount of “wealth” they have is all invested in land and equipment. It is a miracle there are still family farms. Thanks for collectively dismissing and stereo typing Iowans.

IowaWoman on April 18, 2011 at 4:37 PM

+1… and make the first one killed the MOHAIR subsidy, so that Sam Donaldson will be upset…

Khun Joe on April 18, 2011 at 6:36 PM

Gallon of milk last summer $2.88 / This spring $3.85
Pound of Butter Dec 2010 $1.50 / This spring $2.98
Cream cheese on sale Feb 2011 $1.00 / This spring $1.59
Ham December 2010 $1.19 @lb / This spring $1.59
Bananas (on sale) .39 @lb / This spring .69
Coffee January 2011 $6.00 / This spring $6.58

These are some of the prices I’m seeing at my grocery store. Items that I paid $1 for a month ago are now $1.19, coffee has gone from 6 to 6.48 to 6.58. I’m still finding chicken 1/4′s for .69 @lb for a 10 pound bag.

Last summer I would be able to pick up 30 or 40 items for on average $1.00 per item. Now it is closer to 2.50 per item over all. Prices are going up, a lot of it from corn based products. Whoever says there is no inflation doesn’t go grocery shopping.

kringeesmom on April 18, 2011 at 6:39 PM

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