Complicating Ethanol

Tom Coburn believes that we need to stop propping up the ethanol industry:

Sen. Tom Coburn has pulled the trigger and is forcing a long-sought vote on an amendment repealing billions in annual tax incentives for ethanol.

The Senate will vote Tuesday afternoon on Coburn’s motion limiting debate on his amendment that would do away with the 45 cent blender tax credit for ethanol — worth about $6 billion this year — and the 54 cent tariff on imported ethanol.

I concur with the esteemed senator. If ethanol is to survive in the marketplace, we must do away with the crutches and see if it can run with the rest of the crowd.

John Thune believes Tom Coburn is going about this the wrong way:

[M]any groups are circling the wagons around a new bill introduced Monday by a bipartisan group of senators led by Amy Klobuchar (D-MN) and John Thune (R-SD).The bill, called the Ethanol Reform and Deficit Reduction Act, switches the ethanol tax credit on July 1 to a variable rate subsidy that wouldn’t kick in until oil prices fall below $90 a barrel. Think of it as swapping direct payments on your corn ground for counter-cyclical payments.

Under the Thune-Klobuchar plan, the tax credits to companies blending ethanol into gasoline would be modest, just 6 cents a gallon when light sweet crude on the New York Mercantile Exchange fall below $90 a barrel for three months. For each $10 drop in oil futures prices, the tax subsidy rises in 6-cent increments, until it hits a maximum of 30 cents a gallon when prices are $50 a barrel or less.

Sounds like we’ll need a few more government employees just to stay on top of the math involved in making sure that everybody is getting paid what they are supposed to. Look, if we are to straighten out the mess which the ethanol subsidies (aka tax credits) are currently contributing to, let’s just do it–not try to do it and try not to do it at the same time.

Yes, I know that Thune is protecting something that he believes is to South Dakota’s benefit. No, I do not believe that he will ever change his view on this matter. Yes, it saddens me to know that he, and many others, are willing to sacrifice sustainability in support of short term benefits–at the literal expense of the taxpayers.

Ethanol has been living in the taxpayer’s basement for almost 33 40 years now. It is time it got a place of its own.


And, nothing changes:

The Senate refused to kill a $5 billion annual subsidy for ethanol on Tuesday, backing continued government aid for a Farm Belt-based industry over deficit reduction in an era of record red ink.

The world’s greatest deliberative body grows more obese by the day.