January 7 2011
Nicole Kurokawa Neily
There’s been a lot in the news recently about what, exactly, the 112th Congress should cut from the budget. Let’s start by cutting ethanol subsidies – a small but important first step to stopping the practice of unfairly subsidizing well-connected industries.
Suggestion #3: End ethanol subsidies.
Ethanol – an alcohol used in gasoline – has long been touted as the solution to our nation’s energy crisis. Allegedly, it provides security benefits (no more dependence on foreign oil!), economic benefits (keeping small farms going!), and environmental benefits (it’s renewable, and cleaner burning!) Hooray for this magical fuel source! Even NASCAR likes it!
Well, turns out ethanol’s not as perfect as everyone thought.
For starters, it’s not nearly as “clean” as we were told – in fact, the effect on greenhouse gas emissions is negligible-to-negative because of the amount of energy that goes into making fuel uses more energy than is produced.
Then there’s the fact that farmers, who used to use their land to grow crops for food, began converting farmland for corn to produce ethanol – leading to a spike in world food prices, which disproportionately hurt the poor (and led to a few riots).
Don’t want to take my word for it? Then listen to former vice-president Al Gore.
So why on earth does the country continue to give the ethanol industry massive handouts?
In the recently-passed extension of the Bush tax cuts, a provision was included to extend both the 45-cent-a-gallon tax credit and the 54-cent-a-gallon tax on imported ethanol. As FreedomWorks’ Matt Kibbe states, “subsidizing blending ethanol into gasoline is fiscally indefensible. If the current subsidy is extended for five years, the Federal Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol that the Federal Renewable Fuels Standard already requires them to use. We cannot afford to pay industry for following the law.”
Congress needs to start cutting "crop" from the federal budget - and ethanol subsidies are a good place to start!