A recent study conducted by the Swiss-based group called Global Subsidies Initiative revealed the total cost of the tax breaks and subsidies that go into U.S. production of ethanol to be in the whopping range of $5.1 to $6.8 billion for 2006. It estimates that U.S. tax payers shell out about $17 per million BTUs. For comparison, a 1989 study calculated oil and natural gas subsidies at less than 40 cents per million BTUs after adjusting for inflation.

Proponents of the booming ethanol industry say that the study doesn't include either the taxes paid to the U.S. government by the emerging industry or the costs saved by the government when crop subsidies are lowered due to ethanol demand raising the price of corn. Matt Hartwig of the Renewable Fuels Association said that the operation and construction of ethanol plants generated almost $2 billion in taxes this year.

This all very interesting news in the face of waning hybrid tax credits. The U.S. government has obviously already decided which alternative road we'll be taking. Another item to note is that this article showed up in the Iowa's Des Moines Register. We just think that they should be recognized and commended for asking the tough questions when they're right in the thick of it.

[Source: Des Moines Register]


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