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Time to End the Ethanol Rip-Off

November 1, 2010

Psst! Want to avoid $25-to-$30 billion in new deficit spending over the next five years? You do? Okay, then email, fax or call your congressman and tell him or her you want to let the 45 cent-per-gallon Volumetric Ethanol Tax Credit (VEETC) expire on December 31, 2010.

In the same way you want Congress to extend the Bush tax cuts that are due to expire the same day, letting the VEETC expire will end a subsidy to ethanol producers. It is the only way they can stay in business. It is a hidden tax we pay every time we fill up our gas tank and it is one that deprives us of the full value of pure gasoline.

When Republicans take control of the House and possibly the Senate as well, they will have not just an opportunity, but a mandate to end support for ethanol and biodiesel, two of the worst ideas ever foisted on drivers.

Need it be said that the ethanol scam began with former President Jimmy Carter? He also thought that solar and wind power was a great idea. Ethanol, though, is particularly pernicious because, simply put, it is corrosive to engines. It takes a bite out of every driver’s wallet every time they fill up with a federally required ethanol-gasoline mixture, and it actually reduces the mileage you will get from every gallon.

As a recent issue of Business Week magazine points out “Today the U.S. offers a 45 cent per gallon tax credit to refiners that blend ethanol with gasoline. The government also requires gasoline makers to use a steadily increasing amount of the additive, and it imposes an import tariff to deter foreign competition.”

If you wonder why such stupidity is permitted, Business Week points out that it is a $27 billion industry today. Last year the tax credit was worth more than $4.7 billion.

If the tax credit for ethanol expires on December 31 along with a protective tariff consumers will cease being ripped off. When the $1-a-gallon incentive for biodiesel expired at the end of last year, so did the niche industry making it.

Ethanol is made from corn and biodiesel is made from soy beans. The farmers growing these crops will cry bloody murder, but there is a global market for them so they won’t be selling the farm any time soon. Instead, the cost of the countless food products made in whole or part from corn and soy beans will likely decrease, along with the cost of feed, mostly corn, for livestock.

The battle over ethanol pits its producers and corn farmers, along with the U.S. Agriculture Department against an unusual coalition of environmental groups and cattle ranchers. The former have come to question the alleged benefits of ethanol and the latter have always opposed the way the government’s ethanol mandate forces up the cost of feed corn.

Applauding from the sidelines will be the major U.S. auto manufacturers that worry ethanol will corrode engines that are not designed to handle the stronger blend. Take away ethanol and the cost of an auto will be reduced.

The ethanol tax incentives are just one part of the appalling failure of bad environmental ideas and policies that Americans have had to suffer since the days of Jimmy Carter.

All those “Green jobs” and Green energy projects Obama promised as he rolled out his economic stimulus plan just over a year ago have proven to be a boon…for China! The Department of Energy estimated that 82,000 jobs were created, but government job creation estimates are notoriously wrong. Meanwhile, DOE acknowledged that eighty percent of some Green programs, including $2.3 billion of manufacturing credits, went to foreign firms in China, South Korea, and Spain!

About the only “good” news is that only some $20 billion in stimulus funds have been spent.

Americans are slowly realizing they have been robbed at the gas station courtesy of the U.S. government and that their tax dollars are being shipped overseas to purchase wind turbines and solar panels that, together, produce barely three percent of the electricity used daily.

The problem is that the Greens and the U.S. government have kept Americans in the dark for a very long time regarding all these squirrelly “solutions” they have come up with to save the world from “global warming” (ain’t happening) and dependence on foreign oil (they won’t stop selling it to us and we have virtually stopped drilling here).

It’s the same U.S. government that will not permit any new off-shore oil exploration or drilling and which has dragged its feet on the expansion of nuclear energy since the 1970s.

The sins are many, the jobs for Americans are few these days, the borrowing continues unabated, government spending is obscene, and, next year, you will not be permitted to purchase a 100-watt incandescent light bulb.

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Copyright ©2010 Alan Caruba

Alan Caruba is an American public relations counselor and freelance writer who is a frequent critic of environmentalism, Islam and research on global warming. In the late 1970s Caruba founded the PR firm The Caruba Organization, and in 1990, the National Anxiety Center, which identifies itself as "a clearinghouse for information about 'scare campaigns' designed to influence public policy and opinion" on such subjects as global warming, ozone depletion and DDT.