Dying Days of Ethanol Subsidies?

Published on: 10:05AM Jul 08, 2011

The Wall Street Journal in today's paper had a good article on how ethanol subsidies are even closer to being eliminated.  Under the proposed deficit-reduction plan proposed on Thursday, the 45 cents a gallon blenders credit would be eliminated, however, more than $600 million of aid would be given to service stations to help promote the sale of ethanol.

As long as the mandate remains in place to produce a certain number of gallons of ethanol each year, the eliminate of the blenders credit will most likely have little or no effect on the price of corn.  The credit is simply an additional way of transferring additional revenue to the refineries and does not go directly to any corn grower.  It may affect the price the refinery is willing to pay a little bit, but with the mandate in place, they still have to purchase the ethanol.

It will be interesting to see how this finally turns out.