Goodbye Ethanol Subsidies
May 13, 2011
A bipartisan group of senators introduced a bill that would end ethanol subsidies and eliminate the tariff on ethanol imports last week.
Led by Tom Coburn, M.D. (R-OK) and Dianne Feinstein (D-CA), the proposal has six additional co-sponsors and is an attempt to lower federal spending. The government pays 45 cents to refiners for every gallon of ethanol blended with gasoline; this costs taxpayers $5 billion annually. Imported ethanol is tariffed 54 cents per gallon which is accompanied by a 2.5%$ ad valorem tax. The proposed legislation will end both producer subsidy and import tax.
"The ethanol subsidy and tariff is bad economic policy, bad energy policy and bad environmental policy. As our nation faces a crushing debt burden, rising gas prices and the prospect of serious inflation, continuing our parochial ethanol policy that increases the cost of energy and food is irresponsible. I’m pleased to introduce this common sense bill with Senator Feinstein and will push for its consideration at the earliest opportunity," Dr. Coburn said.
Some think this will make the United States more dependent on foreign oil because it will raise the price of imported ethanol.
Meanwhile Senate Democrats have introduced legislation to remove tax breaks from oil companies. The combination of the proposed bills will like lead to a large debate among the grain and oil states.
What do you think this means for corn production? How about the corn market? What about rural infrastructure?