Protecting oil companies oil wells in the Persian Gulf is a Billion Dollar a Month subsidy, is it not? Escorting oil tankers through foreign seas so they can make it to America is a huge subsidy also.
A few farmer/ investors getting a low interest loan (the ethanol subsidy) for a few million dollars to build an ethanol plant that employs local workers, and saves transporting grain hundreds of miles is pennies on the dollar compared to protecting big oil companies so you can enjoy your $3.50 a gallon gas on your drive to the grocery store.
Unless Ethanol can actually provide real energy for our military, why should there be any interest whatsoever in a useless product that costs more to produce? You let me know the next time a tanker, jet, and tank runs on pure ethanol
No, gov't should not be bailing airlines out or providing subsidies for the airlines, perhaps the corn growers can learn a lesson from that disaster
http://www.ntu.org/main/press_papers.php?PressID=855&org_name=NTU
A.
For over two decades, ethanol has been portrayed as the way to save the family farm and rural America. Iowa Senator Tom Harkin believes that ethanol will be "the next place to look for income for farmers."[16] And, it's easy to see why. Ethanol's supporters are quick to point out that a new refinery in an area will typically cause corn prices to rise 5 to 10 cents per bushel. According to the industry, ethanol generated $32 billion in economic activity and created 153,725 jobs in 2005.[17] Almost $6 billion of that $32 billion accrued to more than 300,000 growers and producers as farm income.[18] Writing in The Des Moines Register, Editorial Page Editor Carol Hunter highlights the benefits of these jobs for Iowa – and by extension all of rural America – declaring: "Those jobs help keep communities viable and offer new career opportunities for Iowa's young people – and older Iowans, too."[19]
While these jobs give the appearance of stability and vitality, they are in fact an artificial outgrowth of the subsidies that support the growing of corn and the making of ethanol. There are, in general, only two ways to increase farmers' incomes: (1) engage in labor activities off the farm, or (2) increase yields for every planted acre. The motivation at the farm level to secure additional income through additional output leads to an aggregate level of overproduction. As The Salt Lake Tribune observed, "We don't make ethanol from corn because it is efficient.… We make ethanol mostly out of corn because it is astoundingly plentiful, thanks to decades of heavy federal subsidies."[20] Author Michael Pollan estimates that taxpayers spend $5 billion a year – almost half of net farm income – to subsidize the growing of 10 billion bushels of cheap corn.[21] As a result, the U.S. sits on a two billion-bushel surplus of corn. According to Pollan, "Ecology teaches that whenever an excess of organic matter arises anywhere in nature, creatures large and small inevitably step forward to consume it, sometimes creating whole new food chains in the process."[22] In this instance, the need to deal with all of that excess corn – which results in large part from government subsidies – and in turn raise farm incomes is used as a justification for the creation and maintenance of the ethanol industry. It is reasonable, therefore, to question how much of this should come at taxpayers' expense.
B. Ethanol is supposed to lead to reduced foreign oil consumption, but former Federal Reserve Chairman Alan Greenspan says, "Its ability to displace gasoline is modest at best."
C.The fuel(ethanol) is supposed to help ensure America's energy independence, but the Government Accountability Office has concluded that the tax incentives given to the ethanol industry have done little to promote energy security.
D.The ethanol industry owes its rather comfortable relationship with politicians to the efforts of Archer Daniels Midland (ADM) and its then-Chairman Dwayne Andreas. Andreas spent the 1970s and 1980s convincing politicians that ethanol was good for America. It just happened that ethanol was also good for ADM. Writing for the Cato Institute, James Bovard lays out in great detail the connections between ADM and a number of powerful Washington politicians – names such as Carter, Dole (Bob and Elizabeth), Daschle, Clinton, Bush, Harkin, and Gingrich. By toiling away in the halls of Congress and spreading generous campaign contributions to both political parties, ADM – and to some measure the entire industry – has been able to reap a taxpayer-funded windfall. Bovard estimates that "every dollar of ADM ethanol profits is costing the American public more than $30."[36] One estimate places ADM's earnings from ethanol in fiscal year 2007 at $1.3 billion.[37] If even a portion of Bovard's ratio remains valid today, then ADM can still expect to do very well for itself at taxpayers' expense.
E.The Lundberg Letter quotes an anonymous oil refiner who believes, "As long as you have 100 senators and 60 of them are from farm states, you will never overturn that tax credit, and now the sales mandate."
F.Government Protection
The ethanol industry not only receives billions of dollars in subsidies each year, but governmental protection from international competitors as well. Ethanol imported into the U.S. is subject to a 54-cent-per-gallon tariff. This levy "has been a significant barrier to ethanol imports," according to CRS.[41]
The tariff deters most but not all imports. Ethanol from Caribbean Basin Initiative (CBI) countries is exempt from the duty. However, the exemption is capped at 7 percent of total domestic use. The Heritage Foundation points out that the 7 percent threshold has not been reached since ethanol production in most CBI countries barely exceeds demand and that diverting non-CBI produced ethanol to CBI countries for shipment to the U.S. is rather costly.[42] As such, domestic producers enjoy an effective monopoly thanks to the government protecting them from global market forces.
Regardless of what form the subsidy takes, taxpayers have spent substantial amounts of money to support and protect the ethanol industry.
Creating Markets by Fiat
Perhaps the most generous subsidy that the political system has presented to the ethanol industry was the Energy Policy Act of 2005. President Bush signed the bill into law on August 25, 2005. The law eliminated the oxygen requirements for reformulated gas (RFG) and with it one of the key reasons for using ethanol. In place of the RFG standard, however, the energy bill established a more clever rationale for ethanol use: a renewable fuels standard (RFS). The RFS requires the use of 4.0 billion gallons of renewable fuels in 2006. That requirement increases to 7.5 billion gallons by 2012. Table 3 below details the RFS thresholds for each year. While the RFS does not specify the use of ethanol, it is generally understood that ethanol is the only way to meet the standard. The legislation does require the use of 250 million gallons of cellulosic ethanol beginning in 2013. The law also gives cellulose-based ethanol an additional benefit on top of a guaranteed market. According to CRS, "a gallon of cellulosic ethanol counts as 2.5 gallons of renewable fuel under the RFS."[43]
Ethanol exposes taxpayers to significant long-run financial risks. The fuel is a combination of two commodities, corn and oil, whose production and prices are given to some volatility. CRS notes that "high corn prices caused by strong export demand in 1995 contributed to an 18% decline in production between 1995 and 1996."[80] It is reasonable to assume that unforeseen events will force taxpayers to increase subsidies for farmers, ethanol producers, or both. Consider these possible scenarios and their impact on taxpayers:
Continued overproduction causes the price of corn to fall; taxpayers must increase subsidy payments to corn growers. Corn production falls due to bad weather and ethanol producers must pay more for corn; taxpayers shell out more in agricultural subsidies (or even disaster compensation) and more to the ethanol industry to offset the price spikes in corn.
Continued high corn prices cause a shift in demand to other crops as ethanol input; taxpayers increase subsidy payments to corn growers to offset lower production, as well as to other farmers to increase production.
The ethanol industry over-expands and has excess capacity; taxpayers increase subsidies to offset potential losses. (According to the Department of Agriculture, "projections indicate ethanol production will increase beyond the mandated minimum level of 7.5 billion gallons by 2012.)[81] In this scenario, it is possible that government would mandate the use of more ethanol, which would cost both taxpayers and consumers. Oil prices drop, making ethanol even less competitive relative to gasoline; taxpayers must increase subsidies to ethanol producers.
I'm getting continually amused by freepers who are cheering on this Jimmy Carter backwards legislation ethanol mandates that made the corn growers nothing but a bunch of welfare mamas
railroads, busses, highway construction-More useful to the public than Ethanol, but the taxpayer coughs up too much to local gov't on ridiculous mandates that continue to keep the unions employed.
Protecting oil companies oil wells in the Persian Gulf is a Billion Dollar a Month subsidy, is it not? Escorting oil tankers through foreign seas so they can make it to America is a huge subsidy also.
Here's a hint...the military actually USES what the oil companies have to offer.
A few farmer/ investors getting a low interest loan (the ethanol subsidy) for a few million dollars to build an ethanol plant that employs local workers, and saves transporting grain hundreds of miles is pennies on the dollar compared to protecting big oil companies so you can enjoy your $3.50 a gallon gas on your drive to the grocery store.
You're making the same argument Hillary Clinton and Co. make when they say they "created more jobs"...when all they did was expand gov't. How is Ethanol keeping gas at 3.50? When oil fell in the mid 80's, Ethanol was STILL carried on the backs of taxpayers and was more expensive. So please, don't think ethanol is doing the tax payer any favor by "saving us" from big oil