Investors.com reported Friday that 73 Senators (Republicans, Democrats, and the two independents) voted to end both the ethanol tax credit and the tariff on imported ethanol. This is a major move if for no other reason than Iowa (the Cornhusker State) is the site of the first presidential primary. This will not be a popular move in Iowa, but it is a necessary move.
The article reports:
"The amendment not only would repeal the Volumetric Ethanol Excise Tax Credit that subsidizes ethanol producers, a favored industry unlike Big Oil, but also a 54-cent a gallon tariff on foreign ethanol from the likes of Brazil.
"According to the administration, oil from Brazil is good, but ethanol is not. Domestically produced ethanol is good but domestically produced oil is bad. Huh?"
The logic of this totally escapes me--and I make no claim to being logical.
The article further points out:
"...the amendment does nothing to end the actual federal mandate specifying U.S. consumption of 36 billion gallons in "renewable fuels" each year until 2022. Without this mandate, the tariff and the tax credit, ethanol could not compete in the marketplace."
Theoretically the removal of the tax credit allows the free market to operate in the area of renewable energy. We'll have to wait and see how that turns out.
Tax credits for ethanol and mandates requiring ethanol have a negative impact on world food prices:
"According to a report prepared by 10 international organizations, including the World Bank and five different arms of the U.N., such as the Food and Agriculture Organization and the International Fund for Agricultural Development -- we're not talking right-wingers here -- increased bio-fuel mandates by governments could raise the price of coarse grains as much as 13%, oilseeds by 7% and vegetable oil 35% on average each year between 2013 and 2017."
It's time to put corn in our corn flakes and gas in our gas tanks. This seems so simple until Washington starts passing laws.
Leave a comment