Just days ago, we reported that the United States Senate rejected an amendment that would have put an end to the the $6 billion in tax breaks and subsidies for producers of corn-based ethanol. Now, we're here to convey the message that the Senate actually approved the amendment. Was our initial report inaccurate? Um, no.

On Thursday, the Senate approved an amendment that could wipe out billions of dollars earmarked for the ethanol industry by voting 73-in-favor, 27-against. The amendment, if passed into law, will eliminate the 45-cent-a-gallon subsidy that the U.S. government hands out to producers of the corn-based fuel. The ethanol-related amendment that passed on Thursday will be tacked on to an economic development bill, which will likely face a tough battle in the Senate.

Turning our attention back to that failed amendment on Tuesday, though similar, it's not identical to amendment that passed through the Senate on Thursday.

On a related note, the House of Representatives voted 283-in favor, 128-against to ban the United States Department of Agriculture (USDA) from dishing out funds to support the installation of E85 pumps at gas stations across the U.S.


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  • 57 Comments
      Kumar
      • 3 Years Ago
      It's been noted elsewhere that, while meaningful, dropping this subsidy won't have a huge impact. Remember that congress has mandated that gasoline be blended with ethanol in increasing amounts over the next few years. So they'll lose this subsidy, yet still have guaranteed demand, so can make up any shortfall by raising prices. Next up, eliminating the tariff on foreign ethanol so suppliers on the coasts don't get ripped off by having to pay more to import ethanol from the Midwest than they could by having it shipped in.
        lne937s
        • 3 Years Ago
        @Kumar
        You may not consider the $6B in subsidies this saves a "huge impact". It is just a portion of the subsidies ethanol gets, and doesn't counteract the mandate, so it will do little for consumption. However I think the government could spend the money better. For example, we could do Cash For Clunkers every year for the cost of ethanol blending subsidies... or we could reduce the deficit.
          rach12
          • 3 Years Ago
          @lne937s
          Cash for clunkers just creates false demand. A partial temporary rise now that will result in lower long term growth later.
        tantareanujellob
        • 3 Years Ago
        @Kumar
        The bill eliminates both subsidies and taxes on imports. In all likelihood this will depress ethanol prices.
        kevsflanagan
        • 3 Years Ago
        @Kumar
        While true we can hope that since this passed that Congress will also repeal that mandate.
      tantareanujellob
      • 3 Years Ago
      UGH finally.
        samagon0
        • 3 Years Ago
        @tantareanujellob
        I agree, gas prices aren't high enough, and since ethanol is mandated to be in the gasoline, we'll see a price correction to reflect the lack of subsidies!
          brian
          • 3 Years Ago
          @samagon0
          ManOnFire-- So you have a big family - Why should we subsidize that with tax breaks for your dependents? So you decided to purchase an SUV for your business - Why are we subsidizing that with tax breaks for vehicles over a certain size? So you decided to live out in the country rather than a short distance from your business, schools and shops - Why should we subsidize that with low gas taxes and Oil Wars in the Middle East to enable you to have cheap gas prices? You made your life decisions - Don't expect the rest of the country to pay for your lifestyle.
          ManOnFire
          • 3 Years Ago
          @samagon0
          Obviously you do not have a big family, SUV, van, or need to travel long distances in an average week. For those of us who do, the current price of gas is killing us.
      Mike
      • 3 Years Ago
      Sounds good to me. This is only a bridge fuel. Only the farmers benefit.
      Agilis
      • 3 Years Ago
      So for those who don't quite understand or realize what this means, like myself, could anyone care to explain? Thanks in advance.
        SaltyGator
        • 3 Years Ago
        @Agilis
        The cost of groceries should go down.
        rllama
        • 3 Years Ago
        @Agilis
        I'll try. But I might be making some of this up, or getting it wrong. First, the government really likes giving money to farmers - particularly corn farmers, so it's somewhat surprising to see them actually end a farm subsidy. This one in particular was, I think, originally intended to get the Corn Ethanol business going under the idea that no one would make corn ethanol unless the government made it worth their while, because without the subsidies they wouldn't make a profit. Meanwhile, we developed a world food shortage causing the price of corn to go up, and the government also mandated a certain amount of ethanol in every gallon of gas or something like that, driving the price up further. So, because of those last two things the Corn Ethanol business appears to have become profitable without the subsidies - but we were still paying them anyway. Also, somewhere along the way it became clear that using Corn Ethanol to run our cars was a pretty dumb idea all along because it basically ends up burning more fossil fuel in the production of the corn, so there's no real environmental benefit, which was part of the point of doing it at all. It'll be a different story when we can start mass producing ethanol from the non-edible parts of the corn plants, or other non-food kind of renewable stuff, but using corn just turns out to be dumb. I'm sure other commenters will jump in to tell me where I've gotten this wrong.
        Making11s
        • 3 Years Ago
        @Agilis
        The federal government hands out $6B annually in subsides for corn based ethanol. Corn doesn't make very good ethanol, but our government is using our tax dollars to encourage the use this second-rate product. For instance, sugar cane, switch grass and hemp (which is still illegal for some reason) all make superior ethanol, cost less to grow and are easier to refine, but corn gets the most money by such a wide margin that it's like comparing the salary of a middle school PE coach to that of Bill Belichick. Taking away the subsidies essentially lets whoever makes the best fuel for the cheapest win. It's more complex than that, but that's generally the idea behind ending the subsidies. Unfortunately for us, the industrial production of hemp is still illegal in the US, and the corn subsidies have set back other ethanol producers in this country by at least a decade. If it wasn't for that, we could easily kick our foreign oil habit within 5 years.
      SloopJohnB
      • 3 Years Ago
      Don't hold your breath on eliminating ethanol subsidies...there's just too much political will and pressure from the farmer states. It's irrelevant whether the carbon balance is negative; it's all about the money.
      francinela
      • 3 Years Ago
      @nst1o1 Thanks for your honesty. Often people in states that make money from these projects only protest change. There's certainly better fuel options than ethanol. Our gov. is pathetic at it's development of alt. fuels. hopefully that changes. @rlog100- Ethanol is not a viable competitor to gas. It's cheaper because the gov. subsidizes it. That money comes from somewhere. The corn industry in general gets way way too much money. Can we build cars that run on natural gas before we give more money to a food that is in almost everything and has poor nutritional value?
        rlog100
        • 3 Years Ago
        @francinela
        All the commentary about gas being cheaper was made when gas was $3-4 range. Now gas is jumping at $5 whenever anything happens. I wouldn't be surprized if it goes well past $5 for more than a few weeks this year. What exists to stop it from reaching $6 or $7 in the next couple of years? A competitor is how the market puts a check on out of control pricing. Diesel is tied to gas in that we get diesel regardless when we make gas. They come out from the same barrel of oil. So its not an oil competitor. The only thing that runs a car like we want to run them today with a minisule of cost impact is ethanol. A natural gas vehicle will not give you the same experience today you get from a liquid fuel vehicle. Much of the vehicle weight is going to go to gas cylinder. Depending on how much range you want, you are going to start sacrificing space. Filling is a can of worms. Good luck with that.
          SloopJohnB
          • 3 Years Ago
          @rlog100
          Unless you've actually owned a CNG vehicle (I like 130 octane, personally! 13:1 race engines on the street...yowzer!) you really cannot totally dis them. CFC cylinders are the thing for CNG...they're already used on HP hydrogen tanks. Volume of course is an issue, but weight, not so much. Range is less, but filling is actually faster than putting 25 gallons in a Ford pickup with an emissions nozzle! Filling at a high pressure CNG station, of course. At home it's a lot slower, probably overnight.
      • 3 Years Ago
      [blocked]
      rlog100
      • 3 Years Ago
      Yay. Let's kill the only real competitor to gas now that gas is getting expensive enough to make Corn Ethonal economically feasible. Now gas can safely break the $5+ price point and leave consumers with no options.
      Dan
      • 3 Years Ago
      I never thought I see this happen. Thank you Senate. This is an example of bureaucracy being defeated.
        Healthy Chap
        • 3 Years Ago
        @Dan
        As Kumar just stated, this has no impact on the ethanol mandate or the tariffs on import ethanol for that matter.
          samagon0
          • 3 Years Ago
          @Healthy Chap
          actually, it removes part of all of the tariff on imported ethanol...
          Healthy Chap
          • 3 Years Ago
          @Healthy Chap
          Missed that. Not that I read the legislation or summaries. But part is not all.
      bronsonfong
      • 3 Years Ago
      Corn is typically used to make ethanol. Over the past 3 years food prices have over doubled due to ethanol. Corn is used to feed cows which affects the dairy sector and meat sector. It is all a chain reaction. Also the consumer loses out since ethanol gives out less miles per gallon than gas.
      Carboy45
      • 3 Years Ago
      This is good. Let the free market decide if we want/need corn juice in our gas tanks.
        • 3 Years Ago
        @Carboy45
        [blocked]
        samagon0
        • 3 Years Ago
        @Carboy45
        I'd agree, except the EPA regulates that we have at least 10% ethanol in our tanks, and soon it will be up to 15%. In other words, there isn't a free market choice.
        Robdaemon
        • 3 Years Ago
        @Carboy45
        I think you may not know the actual meaning of "free market."
      xsalesweasel
      • 3 Years Ago
      Ethanol is the biggest scam going. It makes you get less gas mileage so you buy more gallons that give you less gas mileage and the governments more gas tax money. How do you like that for a vicious circle. Really, conventional gasoline gives better mileage than gasoline with any amount of ethanol in it. The only reason the suppliers were making it was that the government gives them money per gallon for every gallon produced . That means that we are paying the bill in the form of tax before it is made and then taxed again at the pump. It enrages me. How about you? It has also made corn cost way too much for the farmers who depend on it for animal feeds.
        SloopJohnB
        • 3 Years Ago
        @xsalesweasel
        And yet 90% of congresspeople get reelected by their own district while their own district japes other congresspersons for corruption, greed, graft, etc. One way around this, notwithstanding the hyperbole of T. Boone Pickens, is to go CNG. Many people have NG piped to their homes, just get a car/pickup that runs on natural gas and have a compressor installed in your garage. The economics work out especially well in states like Utah that have some interesting rules on NG sale to the public.
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