Study shows Americans pay billions for ethanol subsidies
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]
Reader Comments (Page 1 of 1)
Gary 1:52PM (10/28/2006)
How do you quantify the 200 billion or so that we spend per year in the middle east? Isn't that basically a subsidy for oil? If we didn't spend billions trying to stabilize the middle east, oil prices would go up and alternatives would be more cost competitive.
. . . So maybe we should really think about how much we are subsidizing oil.
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George Krpan 3:58PM (10/28/2006)
Gary, then you're admitting that the real reason we're in Iraq is about the oil.
I couldn't agree with that more.
They're in Iraq procurring our lifestyle.
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frank78 4:44PM (10/29/2006)
Why do politicians endorse these lost causes? If using ethanol- grow it from sugar beets or sugarcane, not corn!! Those crops yield roughly twice as much ethanol/acre. This welfare to corn farmers at the expense of the entire American public is ludicrous.
Corn grown ethanol costs a crapload more than that from sugarbeets and sugarcane. Plus, ethanol gets way less MPG than gas, let alone a diesel engine. Heck, grow biodiesel and you get a fuel that allows cars to go twice as far as an E85 car. Think about it- half the amount of fuel needed for the same amount of travel. When you think of the algae produced biodiesel (60,000+ gallons/acre) vs an acre of corn grown ethanol you get this for an average sedan:
1)biodiesel fuel: sedan w/35 mpg X 60,000 gallons of fuel/acre = 2.1 miles of driving/acre of fuel grown.
2)corn fuel: sedan gets 18-20 mpg X 354 gallons of fuel/acre = 6372-7080 miles of driving/acre of fuel grown.
That's 300 times as much driving ability with biodiesel (from algae). Even with more conventional palm oil, you get about 3 times as much driving ability as ethanol.
Then there's the ability of algae grown biodiesel to directly use up carbon dioxide produced by coal fired power plants. Less land used, far more energy efficient. Real tough choice!!!
Yet politicians are encouraging soybean produced biodiesel which is completely inefficient. WHY?? Welfare payments to farmers, who grow both corn and soybeans already.
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Gary 7:21PM (10/28/2006)
George, I think, while people can argue complexities, there's no question that, if Kuwait and Saudi Arabia had no oil in 1991, we wouldn't have mobilized, responded so quickly and been so intimately involved over the past 15 years.
How many African countries have been warring for how long without the least bit of attention from us?
I believe I heard a quote from Cheney this morning saying basically that we can't leave Iraq now because we can't leave the oil in the hands of the terrorists.
I say subsidize ethanol. Tax mideast oil. Let's do everything we can to end our dependence. It's worth paying a little extra at the pump.
We in the US pay a lot of lip service to freedom, but we'll never be truly free until we're free of this dependence.
Is paying an extra dollar or two per gallon really such a high price to pay for freedom? To hear some politicians tell it, you'd think so.
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George Krpan 1:15AM (10/29/2006)
I don't think ethanol will work. It's energy intensive to make. What is the net energy yield? I doubt if it's much. People are pulling for it because they'll get rich producing it. A lot of land will be ruined.
Yes, tax the shit out of gasoline at retail service stations. Continue to put the pressure on people to reduce their driving, get smaller cars, ride bicycles, get hybrids and electrical vehicles, live close to work, etc. Use the taxes to revive the railroads and then raise the tax on diesel. Trains move freight far more efficiently than trucks and trains can even run on electricity. They can move people too and could eliminate some air travel, the worst fuel waster.
Also, use the taxes to fund new battery technology. Altair Nanotechnologies has a new battery that can be used in cars that can be charged in minutes, is safe, and will last longer than the cars they're put in. Subsidize them to get those batteries into mass production immediately. Also subsidize the conversion of our existing fleet of gasoline powered cars to electric cars. Heck, do it yourselfers are doing this. Cars don't have to be reinvented and we could not expect everyone to buy a new electric car.
And, of course, subsidize wind and solar power. We've got no shortage of intense sunshine in many parts of our country.
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Fred 7:05PM (10/29/2006)
Frank,
I agree that biodiesel is better than ethanol. BUT, I own a GMC Sonoma four-banger that runs on E85, that is 85% ethanol, while my Ford diesel pickup will only run on B5, which of course is only 5% biodiesel. The technology is just not there to make use of biodiesel yet. So until it is, let's do E85 and pressure the hell out of the automakers to build us vehicles that can run on biodiesel. B5, or even B20, is just not going to cut it.
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MikeW 2:59PM (10/30/2006)
Other people have no trouble with B100, and even being conservative using B20.
Maybe it is the Ford engine, 7.3?
Screw ethanol, and E70-E85 seasonal blends. Go butanol.
Okay learn how to get good yields for ethanol, and then apply that to butanol.
Got to crawl before walking, ehh?
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Bingo 4:06PM (10/30/2006)
I want that corn to go into prime steaks not autos! Algae bio-diesel seems to me to deserve a real close look.
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Tom 11:08AM (1/30/2007)
Guys, when you are paying $10.00 for corn flakes, $6.00 for a loaf of bread, $25.00/lb for steak, etc... You will begin to realize that perhaps oil is not that bad or at leat that ANYTHING bio is not the answer. We simply do not have anywhere near enough acreage in this country to sustain any bio product that could replace oil.
The true answer is going to be battery or hydrogen.
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Tim 1:37PM (1/30/2007)
Tom- You're absolutely right. The answer is electricity, but never from Hydrogen. Storing electricity in Hydrogen and using it in a fuel cell is 4 Times LESS efficient than storing it in batteries and using it in electric motors. H2 it a dangerous terror target of opportunity and one of the worst green house gasses when it escapes into the stratosphere. Yes, tax imported oil while we slowly divert the subsidies from corn ethanol to research into better battery technology and more efficient renewable fuels like cellulose Butanol from waste, switch grass etc and Biodiesel from Algae. Let’s not use food as auto fuel. Too many farmers have become dependant on the public dole and just cutting their funds cold turkey will force many families off their farms. Then, who will grow the switch grass or our food? Giant corporate farms, that’s who. We need to act carefully, clearly and concisely. Measure twice, cut once. Unfortunately this takes time and patience. We can already see the tide changing.
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