A couple of days ago, U.S. Senators Dianne Feinstein of California and Tom Coburn of Oklahoma introduced the Ethanol Subsidy and Tariff Repeal Act. The bill, amendment #309 to a small business bill, will do away with the Volumetric Ethanol Excise Tax Credit (VEETC) and the tariff on imported ethanol if passed. According to Senator Feinstein:
Ethanol is the only industry that benefits from a triple crown of government intervention: its use is mandated by law, it is protected by tariffs, and companies are paid by the federal government to use it. Ethanol subsidies and tariffs sap our budget, they're bad for the environment, and they increase our dependence on foreign oil. It's time we end subsidies that we cannot afford and tariffs that increase gas prices.
The VEETC is a subsidy that gives refiners $0.45 for every gallon of ethanol blended with gasoline, adding up to about six billion in taxpayer dollars every year. $3 billion will be saved this year alone if the bill passes by July 1. Eliminating the tariff will lower the cost of imported ethanol. Support for ethanol subsidies has been waning lately. Even Al Gore, who helped pass subsidies for corn based ethanol during his vice presidency, recently changed his stance. Close to 40 organizations have asked to stop the subsidy, including some refiners who receive VEETC cash.
[Source: The State Column | Image: drewzhrodague – C.C. License 2.0]