Minnesota Farmer


We’re Paying Big Oil to Support Ethanol
January 18, 2011, 1:27 pm
Filed under: Biofuels, Corn, ethanol, Farm, Politics | Tags: , , ,

Congress, in its lame-duck session, extended for two years the 45-cent- per-gallon tax credit for ethanol after a great deal of squabbling by both conservatives and many environmentalists. That credit will cost U.S. taxpayers $6 billion to $7 billion in 2011.

With much less controversy, Congress extended $35 billion in tax credits to the U.S. oil industry for oil depletion allowances, incentives for deep sea wells and rapid depletion allowances on equipment costs and other factors.

In fact, the oil industry enjoys the profits that come from both of these tax credit programs, because the ethanol subsidy only goes to the refineries that blend the biofuel with gasoline for sale to consumers. Ethanol producers do not benefit from those credits.

Sounds like government.  Payoff the big guy, who really doesn’t need the money, so that the little guy has a chance.

Michael

 

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4 Comments so far
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“In fact, the oil industry enjoys the profits that come from both of these tax credit programs, because the ethanol subsidy only goes to the refineries that blend the biofuel with gasoline for sale to consumers. Ethanol producers do not benefit from those credits.” That being the case, why did the the ethanol lobby make damn sure the tax credit that goes to the oil companies got added to the tax bill at the last minute. I never heard one oil company lobbying for the VEETC extension, in fact several of them publicly said they didn’t need the credit. But the ethanol lobby blathered on about how the credit was going to create thousands of jobs endlessly for months, which it won’t. And by the way, the VEETC extension was only for one year, not two.

Comment by stopethanol

Unfortunately the oil companies are not too excited about losing some of their cash to some small time farm folks. They want keep all of that money for themselves. Sometimes, in politics, you have to give money to your enemies to get what you want. They don’t need VEETC since they hope ethanol will die and they can get the whole pot back. The source of many of the “facts” that you have in your article is big oil. They don’t like to lose.

Comment by Michael

Michael
I work for Growth Energy (the leading voice for US ethanol supporters) and my organization proposed a solution to this “oil payment problem.” The Fueling Freedom plan would phase out the blender’s tax credit, which as you know does not even go to ethanol producers but goes to the fuel blenders (the oil companies) as an incentive to blend ethanol. The plan would redirect some portion of that tax credit to help pay for the development of infrastructure, such as blender pumps and flex fuel vehicles. With infrastructure in place, ethanol could compete and beat oil, without any government support. That would give the “little guy” a chance without paying the big guy. Read more about this plan at http://www.growthenergy.org/fuelingfreedom

Comment by Stephanie Dreyer

I’m already a fb friend of Growth energy. I’m also an investor in a POET plant. I like what you folks are doing.

Comment by Michael




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