End ethanol tariffs and subsidies, Senators demand
December 1, 2010
by Meat&Poultry Staff
WASHINGTON – A bipartisan coalition of 17 Senators led by US Senators Dianne Feinstein (D-Calif.) and Jon Kyl (R-Ariz.) called on Nov. 30 for an end to tariffs and subsidies supporting ethanol in a letter sent to Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell. According to the American Meat Institute, the Senators expressed their lack of support for extending the current 54-cent-per-gallon tariff on ethanol imports and the 45-cent-per-gallon subsidy for blending ethanol into gasoline. Under current law, both provisions expire at the end of this year.
“Subsidizing blending ethanol into gasoline is fiscally indefensible,” the letter stated. “If the current subsidy is extended for five years, the Federal Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol that the Federal Renewable Fuels Standard already requires them to use. We cannot afford to pay industry for following the law.”
The letter mentioned a July 2010 study by the Congressional Budget Office, which found ethanol tax credits cost taxpayers $1.78 for each gallon of gasoline consumption reduced, and $750 for each metric ton of carbon dioxide equivalent emissions reduced. The letter also mentioned a study by Center for Agricultural and Rural Development at Iowa State University, which recently estimated that a one-year extension of the ethanol subsidy and tariff would lead to only 427 additional direct domestic jobs at a cost of almost $6 billion, or roughly $14 million of taxpayer money per job.
“Historically, our government has helped a product compete in one of three ways: subsidize it, protect it from competition or require its use. We understand that ethanol may be the only product receiving all three forms of support from the US government at this time. Eliminating or reducing ethanol subsidies and trade barriers are important steps we can take to reduce the budget deficit, improve the environment, and lessen our reliance on imported oil,” the letter concluded.