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MoneyWise: EPA Okays 15% Ethanol

10:28AM Nov 02, 2010

The Environmental Protection Agency (EPA)’s long-awaited decision is in: E15 blends are approved for 2007 and later-model vehicles. Now the question is practicalities. Of the 239 million cars on the road in the U.S., only 43 million, or 18%, are 2007 or newer.

“We’re disappointed in the limited scope of this approval, but pleased the EPA has finally allowed higher blends of ethanol in some motor vehicles,” says National Corn Growers Association President Bart Schott, a grower in Kulm, N.D. “This bifurcation of the approval process, and the labels to be placed on higher-blend fuel pumps, can lead to consumer confusion and therefore act counter to the original intent.”

EPA’s decision casts an unnecessary shadow on all ethanol blend levels, Schott adds. Blends up to E15 and beyond have been tested and found suitable for a wide range of newer and older vehicles.
Last month, the automotive engineering firm Ricardo found that moving from 10% ethanol in gasoline to 15% will mean little, if any, change in the performance of cars and light trucks manufactured between 1994 and 2000.

Life without Subsidies? As a trade-off, many U.S. ethanol groups have argued that if they are given greater access to the market, they are ready to compete without subsidies. The attention now shifts to Congress, where lawmakers are debating what to do with the 30-year-old ethanol tax credit and import tariff that cost $6 billion annually. Allowing these subsidies to expire as scheduled at the end of the year would help lower gas prices, save taxpayers money and provide Americans with greater access to advanced renewable fuels like sugarcane ethanol.

—Linda H. Smith and Jeanne Bernick

Top Liners

“If we get into a period of protectionism, it could dampen ag’s outlook.”
Terry Barr, economist and senior director of industry research at CoBank, part of the Farm Credit system

“Let’s not forget what a powerful thing it is to say we can end hunger for 1.6 million children.”
Rajiv Shah, USAID Administrator

“Our members don’t just make equipment, they make prosperity.”
James McCullough, Association of Equipment Manufacturers

Changes to Health Flex Plans

If you have cash left in your employee flex plan, health reimbursement account or health savings account this year, you can use it to buy over-the-counter drugs. But the new health care law provides that after 2010, such accounts can’t reimburse the cost of such medications, reports Larry Kopsa of Kopsa Otte, CPAs & Advisors. Payments will be allowed only for prescriptions and insulin, he notes.

“If your health savings plan uses a debit card, the Internal Revenue Service will OK over-the-counter drug purchases made with the cards through Jan. 15, 2011, to give debit card issuers a little extra time to reprogram their computer systems,” he says.

Plans must be amended by June 30, 2011, with the revision retroactive to Jan. 1 (or Jan. 15 for plans using debit cards) to comply with the rules.

—Linda H. Smith