Posted in: Infrastructure,
by Patrick DeHaan on Dec 10, 2010 02:14 PM
Lawmakers are slowly beginning to focus on the soon-to-expire ethanol credits and import tariff- two major supports of the renewable/biofuels industry.
Currently, imported ethanol is subject to a 54-cent per gallon tariff, something Brazilian exporters hope will die. A 45-cent per gallon ethanol credit would also die if the measure isn't extended by the time the current credits expire on December 31.
If the ethanol credit doesn't pass, that would likely mean retailers selling ethanol would be forced to raise prices to reflect the actual cost of the product. Currently, ethanol is priced higher than conventional gasoline on wholesale markets, and results in lower fuel economy.
Biofuels credits cost the United States over $6 billion per year, and renewing them is something that corn-belt lawmakers are obviously fighting very hard to get.
Environmentalists, Livestock farmers, and food producers say the subsidies should die- which doesn't come as a surprise- as ethanol credits boost demand for corn, something they'd like to see cheaper to keep costs from soaring out of control.
I'm all for letting the credits die- if South American farmers can do it cheaper and keep our food prices lower, what are we waiting for? I don't really equate Brazilians to sending money to OPEC countries, so come on- let the credits die, and let South American farmers provide us ethanol cheaper than we can. We'll get cheaper, more competitive ethanol producers, lower food prices, and we won't be funding Middle East nations.