RIP: Tax credit for ethanol (maybe)
The wasteful and damaging tax subsidy for ethanol production has expired after 30 years. The remarkable thing about this is that it's political season in Iowa - the capitol of ethanol subsidies - and candidates have not been bragging about their support for it.
It appears that a coalition of the right and left may have doomed this example of corporate welfare, although the production of ethanol will continue - thus keeping the cost of food high.
Nearly 40 percent of the United States corn crop goes to ethanol and byproducts, including animal feed.
The Government Accountability Office, an investigative arm of Congress, said, "The increasing demand for corn for ethanol production has contributed to higher corn prices."
The higher prices have "created additional income for corn producers" but also appear to have increased costs to meat and poultry producers, big food companies, grocery shoppers and federal food programs, the Government Accountability Office said.
The tax credit, which cost the government nearly $6 billion in 2011, went to gasoline refiners that mixed ethanol with gasoline. The government has promoted ethanol and other biofuels as a way to reduce dependence on imported oil.
Michal L. Rosenoer, a policy analyst with the environmental group Friends of the Earth, said the end of the tax credit showed that "ethanol is no longer a sacred cow."
"The end of this giant subsidy is a win for taxpayers, the environment and people struggling to put food on the table," Ms. Rosenoer said. "Production of ethanol, with its use of pesticides and fertilizer and heavy industrial machinery, causes soil erosion and air and water pollution. And it means that less land is available for growing food, so food prices go up."
Turning our foodstuffs into fuel is a monumental waste - especially since there are bio fuel alternatives (various grasses) that work just as well. The subsidy was a sop to farmers - mostly corporate farmers at that - and bore little relationship between production of bio fuel and more energy independence.
The ethanol subsidy may be dead, but its spirit lives on:
As Congress begins work on a new farm bill, ethanol companies and gasoline station owners want to expand a federal program that helps pay for pumps and other equipment needed to dispense gas with higher concentrations of ethanol.
The same crowd with their hands out, wanting taxpayer money. Will they ever learn?