$5 billion-a-year ethanol subsidy nearing its end?

$5 billion-a-year ethanol subsidy nearing its end?

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How to remove $5 billion from the federal deficit in one fell swoop? Eliminate the $5 billion-a-year subsidy given to oil refiners for blending ethanol into gasoline.

The Senate voted Thursday to do just that...

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...even though the amendment is attached to a bill that probably won’t pass, the 73-27 vote sends a message that many Democrats and Republicans are behind an idea supported by an odd coalition that ranges from Tea Partyers to the Sierra Club.

Thirty-three Republicans joined 40 Democrats in voting to eliminate the subsidy.

Should such a bill pass both houses, how would the oil companies respond to that? Does the $5 billion just vanish back into the US budget? If not from our taxes will we pay it direct then, in gasoline prices, in food costs? Or is this a Win-Win for everyone?

Critics say ethanol subsidies are no longer needed for an industry that is already supported by a mandate from Congress that requires refiners to blend 36 billion gallons of biofuels into auto fuel by 2022. They say it drives up corn prices, mainly for animal feed.

"A tax break from ethanol is a gift to the oil companies and grain producers, a gift that actually harms American consumers and our environment," said Sen. Ben Cardin, D-Md.

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(visit the link for the full news article)

Here comes high, and when I say high I mean HIGH FOOD prices...

Take our last look at the past, and we become the holders of the memories of, our free world. (subjective)

I personally will pass on the memories of a good life..

RIP ,, the past

Ethanol has only kept the wholesale price of gas down about $0.14. It really hasn't helped reduce price all that much. In fact it has cost refiners profits to the tune of a half billion a year according to some studies.

Some quotes from the Congressional Budget Office,

In addition, ethanol usage may affect other areas of the federal budget. The rise in food prices during
the 2007–2008 period, some of which was attributable to ethanol, boosted the consumer price index, which is used to calculate annual cost-of-living adjustments in benefits for such programs as Social Security, military and civilian retirement, and Supplemental Security Income

The economic viability of producing corn ethanol— whether manufacturers can show a profit—is intrinsically linked to the price of gasoline (for which ethanol is a substitute) and to the price that ethanol producers pay for corn. The Congressional Budget Office’s (CBO’s) analysis of current technologies and prices suggests that, without subsidies for producing ethanol, the “break-even ratio” of the price per gallon of retail gasoline to the price per bushel of corn is currently about 0.9.1 In other words, when the price of a gallon of gasoline is more than 90 percent of the price of a bushel of corn, it is profitable to produce ethanol. At that point, revenues from the sale of ethanol would be sufficient to cover the fixed and variable costs of producing it.

So in other words they don't need the subsidy to make a profit. So that money should be spent on covering the externalities of producing Ethanol. The money would probably be better spent covering the economic cost to the government of using Ethanol. As corn is pulled out of the food chain to make Ethanol the price of many staples will go up. It is allready happening.

Producing ethanol for use in motor fuels increases the demand for corn, which ultimately raises the prices that consumers pay for a wide variety of foods at the grocery store, ranging from corn syrup sweeteners found in soft drinks to meat, dairy, and poultry products. In addition, the demand for corn may help push up the prices of other commodities, such as soybeans. (Farmers that increase the number of acres they plant with corn to meet rising demand will most likely plant fewer acres with other crops.) From April 2007 to April 2008, the increasing
demand for corn to produce ethanol contributed, in CBO’s estimation, between 0.5 and 0.8 percentage points
to the 5.1 percent increase in the price of food...

At least 10% of the increase in food prices came from Ethanol production. This will only get worse as the mandates for the amount of ethanol increases.

I say we cut the subsidies and use the money to prepare for the eventual pressure on food prices.

How is this bad?

Corn has been artificially elevated with a government mandate to use corn for fuel. By eliminating this, it means more corn for food.

Gas/Ethanol has been devestating to the small engine industry, boat motor industry, and consumer. One of the true benefactors of ethanol has been repair shops.

I help manage a farm supply store, about half of the troubles with mowers, chain saws, weedeaters, tractors and any other small engine can be directly tied to ethanol....

Ethanol gas after sitting for a few weeks breaks down and seperates....into gas, water, and a sticky glaze that coats and clogs fuel lines and carbeurators.... the engine wants to turn over but never cranks...or...it will run for about 3-5 minutes and then shutsdown to never crank again... until the line is cleaned and carb is replaced.

This has wreaked havoc with warrenty repairs and many manufacturers don't warrenty ignition repairs anymore.

As for food, farmers will switch back to production levels dictated by the food consumer and markets.... as such, corn will not be artificially subsidized and inflated... all that corn will then be going back to corn based food production and food prices should stabilize. Your Doritos may not go down in price, but they won't be going up on a weekly basis.

The ones that will siffer...as usual...will be the farmer that switched all of his production into corn...bought all of that expensive machinary soley for corn production, has graneries filled with corn... hoping for peak prices...and now sits there, on all that corn, as a market disappears in front of his eyes... while this years production has not even been harvested yet.

Corn for food is already in danger from cross pollination, and Monsanto recently had no contest with the USDA Sec. for deregulation of their new bio-fuel corn (not tested or designed for human/animal consumption). Even if the subsidies go, the damage is done.

reply to post by AlreadyGone


i was invited to go spear fishing with a friend's family. the dad is a mechanic. they have a v6 mustang car motor in their boat. when we got out in the ocean, we fished for awhile, but the carburetor clogged because of the ethanol and we had to use a small 5 horse power motor to get back. it took 5 hours.

reply to post by Erongaricuaro


If they'd gone with Coskata's enzyme method using waste cellulose, or better yet algae oil
making 100,000 gal per acre I'd be on board.

Instead they chose this kluge method that is moronic as if they are seeking epic fail.

We have the solution to the fuel issues, and not using crop land to boot.

We don't even need the middle easts oil.

Coskata $1/gal ethanol via waste and trash and enzymes

Algae Oil - 100,000 gal per acre per year in the desert using human or livestock waste as feedstock

This is just a small piece of the corprate welfare pie that needs done away with. Besides I agree with several of the other posters ethanol is crap fuel. I don't even get close to the gas mileage as opposed to pure gasoline.