What subsidies? The research and development tax credit? You are probably referring to the gulf wars. The ethanol boosters have the ridiculous position that the gulf wars were a subsidy to big oil.
Perhaps you did not see the financial results of the major energy companies. Exxon paid more than $100 billion in taxes on $400 billion in revenue. The traditional energy companies are taxed and regulated at every inch of production. New oil refineries are just about impossible to permit and build. Ethanol refineries go up every week.
There is no comparison of subsidies in other industries to ethanol. The ethanol subsidies are massive and permament. They are especially egregious because consumers are forced to buy the product. Even with overwhelming evidence of the boondoggle, the ethanol boosters just want more subsidies.
One of the offical stated reasons for Gulf I was, in fact, the continued free flow of oil.
Doesn’t the oil industry still get the depletion allowance credit? Isn’t that a subsidy?
What subsidies are people wailing about on ethanol?
A tax credit for blending in gasoline ($0.51/gal) and import tariffs that boost the price of ethanol imported from off-shore. I’m not going to complain about tariffs, since they’re the one form of taxation that is supported in the US Constitution from the get-go.
I’m not talking about the military support of oil access as a subsidy. You want to talk about that, go talk to liberals or Mikey Moore.
I’m talking about EXACTLY the same sort of thing you are, but of which you’re either unaware or are deliberately ignoring: tax credits for oil companies.
Oil exploration trusts, as well as pipeline companies, can set up tax shelters in master/limited partnerships to gain tax credits. By your definition of “subsidy” — the oil exploration and transport companies are receiving a “subsidy.”
Examples of MLP’s with tax advantages: San Juan Basin Royalty Trust (ticker: SJT), Kinder Morgan Energy Partners (ticker: KMP).
Full disclosure: I’ve owned both of these tax-advantaged trusts in the past, probably will in the future. I’ve also owned many other tax-advantaged MLP’s and trusts, both in the US and in Canada, in oil, natural gas and coal exploration/transportation/pipelines. Bought at the right time, and in sufficient amounts to justify the additional tax hassle at the time you file your 1040, they return excellent dividends (from 6 to 10% or more) and some losses thrown off (from depletion, foreign taxes paid, etc) you can use against your other income.
If you’ve never owned a MLP/trust that issues a K-1 instead of a 1099, you should check out the additional complexity BEFORE you buy one of these. Once you hit the “buy” button to buy one, you’re going to get a K-1 and the attending complexities.
You talk of the ethanol subsidies being “massive and permanent.” Let’s put aside the weight and density of money for the moment and deal with the permanence of these subsidies. The latest “farm bill” is already proposing reducing the blending tax credit to $0.45/gal.
Wait? I thought this was supposed to be permanent? How is it that the Congress is already proposing reducing this if this “subsidy” is permanent?
re: Consumers “forced” to buy the product. Consumers are also “forced” to buy cars that meet minimum crash standards that add mass to vehicles, thereby reducing the mileage. Consumers are denied choices of vehicles by emissions laws (eg, the idiotic Californian diesel emissions standards) that results in consumers being denied the opportunity to purchase very high mileage autos (50+MPG) from Europe.
If you want to complain about what consumers are forced to purchase, I’d go after the mass and diesel issues, which are costing consumers far more fuel and money than ethanol is.
Ethanol’s profit margin, BTW, has come way, way down in the last two quarters, both due to the higher price of corn inputs and the rapidly decreasing price (and increasing quantity) of ethanol out there. In some reports I’ve seen, the margins for ethanol are only slightly higher than XOM’s margins now. The oil industry has a PR problem they alone can solve, and not by buying stupid ads on NPR or PBS. Other fossil energy companies are expanding all the time - coal bed methane wells are spreading across Wyoming and Montana like jackrabbits, and new coal mining operations are opening in Wyoming and Montana.