Corn Ethanol just got better?!?

You have to understand there is bipartisan support against these subsidies, but there is a caucus in Iowa, and many senators come from corn states. Ethanol mandate won by only a tie breaker vote by the vice president in 1994. He has recently admitted voting for it because he was going to run for president. Now that it is entrenced then the pacs have gotten bigger. Ethanol was enlarged by the president and congress in 2007 to be the monstrosity it is today. The subsidy should have died at the end of last year, but graft and corruption to the rescue. Okay maybe not that but a president from a corn state and senators that may run for president and need iowa. We need to kill the gulf to save the environment!

http://www.msnbc.msn.com/id/1679222...energy/t/there-enough-corn-bush-ethanol-plan/

 

That seems to be a 2007 article Tripp so the advanced design to save natural gas costs may not survive in a cheap nat gas world?
I am not an ethanol plant expert but the ones I saw lately were electric power. Ethanol recovery is energy intensive due to azeotropic distillation to get the 12% ethanol out of all the water. Not to mention growing the corn.

 

CAPTIONBy Mike Groll, AP
The Senate has voted to end about $6 billion in taxpayer subsidies to the ethanol industry. The vote on an amendment was 73 to 27.

Under the amendment, co-sponsored by Sens. Tom Coburn (R-Okla.) and Dianne Feinstein (D-Calif.), refiners would lose the 45-cent-a-gallon subsidy, and the 54-cent-per-gallon tariff on imported ethanol from Brazil and other countries would be eliminated, Reuters writes...

...The bill now goes to the House, which voted today to block the Agriculture Department from funding equipment the ethanol industry wants so filling stations can sell gasoline with higher blend rates.

 

When you say refiners, is that the ethanol refiners? or oil refiners?
I don't quite understand why the farm states like this subsidy unless it encourages greater use of ethanol than mandated.

 

The article was not clear, but I think we can assume they mean "ethanol refiners".

Farmers probably like this because they can get guaranteed payments growing corn instead of some other crops.

 

The subsidy goes to the blenders, those blending ethanol and other chemicals with gasoline. There are not ethanol refiners, they are ethanol distilers, when you read refiners in this context you should think oil refiners.

The question of why farmers care, they should be against the subsidy also. It in essence just pays the blenders, and the result if the blenders don't take it as proffit, is a subidy to gasoline of arround a nickle. But without the subsidy there is no justification of the sugar tarrif, and this is what creates demand for corn based ethanol and hfcs, instead of imported ethanol and sugar. So the Big ag conglomerates care, but it really doesn't help individual farmers, but they would have to shift there crops. .

Hopefully the repeal will make it through the house.

 

Sen. John McCain was on FOX with Gretta Van S. last night, wow he was extremely negative about using ethanol/subsidy situation. I have never heard such bold discussion on the issue. Refreshing, but sad, he says example that Washington still not working. Unclear to me if the interview pre-dated yesterday's news. Worth posting here if avail. It was short segment.

 

McCain: Ethanol still calls the shots - The Hill's E2-Wire

 

I think in this context "refiners" refer to ethanol producers, as opposed to corn producers.

An "ethanol" subsidy would apply to ethanol producers (regardless or which raw material is used to produce the ethanol). A commodity subsidy (i.e. deficiency payment) would apply to the commodity growers (e.g. corn, cotton, etc.).

In the case of the corn-based ethanol subsidy, corn growers do get a share of each subsidy dollar as a function of increased supply (and also increased demand with the addition of a federal ethanol mandate). But the corn grower's share of that subsidy dollar is smaller than that of the ethanol producer.

Even though farmers might be better off getting a direct corn subsidy instead, because the ethanol industry has to pay for much of the lobbying, corn farmers do get a pretty decent tradeoff nonetheless. However, the calculus for this symbiotic relationship could change if the ethanol subsidy is phased out or eliminated.

 

No Zen, the subsidy, in the form of a tax credit, goes to the fuel blenders. Who ever wrote refiners got it wrong, but often the blender is the oil refiner. But you are right the combination of subsidy and tariff most directly benefits those producing the corn based ethanol. The way the byzantine tax code and agriculture bill is worded has made sure to prop up corn based ethanol production.

Senate kills off ethanol tax credits in possible break with tax pledge - The Hill's E2-Wire

 

You're right, the tax credit goes to registered blenders. However, there's also this:


Under Section 40(b)(3) of the IRC, ethanol producers that manufacture less than 60 million gallons of ethanol per year qualify for a tax credit equaling 10 cents per gallon on 15 million gallons of fuel ethanol. The maximum incentive is $1.5 million annually. The American Jobs Creation Act of 2004 (P.L. 108-357) modified the Small Ethanol Producer Tax Credit by allowing the $1.5 million credit to be passed-through to farmer owners of ethanol cooperatives. The Energy Policy Act of 2005 (EPAct 2005, P.L. 109-58) made further modifications to the tax credit. EPAct 2005 amended the definition of a "small ethanol producer" from 30 mgy of ethanol production to 60 mgy of ethanol production. This tax credit is on the books through December 31, 2010.

http://www.ethanol.org/index.php?id=78#Small%20Ethanol%20Producer%20Tax%20Credit

 

Now's the time to call or write your Congressanimal and encourage them to end the fuel ethanol subsidy and ethanol import tariff:
Contact Elected Officials: USA.gov