Senator Dianne Feinstein calls to end irresponsible ethanol subsidies

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If the cattle industry received the same government support as the ethanol industry, ranchers would get generous subsidies to raise their stock, the American public would be mandated to consume certain amounts of beef and most foreign cattle would carry punitive import tariffs.

 Of course this is not the case.

 Ethanol is the only industry that benefits from such a triple crown of government intervention: its use is mandated by law, oil companies are paid by the federal government to use it and it is protected by tariffs. I believe it is time to end this outdated policy that is fiscally irresponsible, environmentally unwise and makes our country more dependent on foreign oil.

 Last month, I introduced legislation to repeal the 45-cent-per-gallon corn ethanol subsidies and reduce the ethanol tariff. My bill would eliminate a subsidy that costs taxpayers nearly $6 billion a year while continuing to support producers of non-corn, second-generation “advanced biofuels” that are more environmentally friendly and non-market distorting.

 The practice of subsidizing the blending of corn ethanol into gasoline is fiscally indefensible. If this policy were to remain in place, the U.S. Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol over the next five years, even though the Federal Renewable Fuels Standard already requires those companies to use ethanol.

 It makes no sense, and we cannot afford to pay the oil industry to obey the law. Plus, large oil companies certainly don’t need more financial help from taxpayers. The cattle industry and other animal agriculture industries are disadvantaged in this equation. It is increasingly more expensive for ranchers to buy feed, largely because they directly compete with ethanol producers for corn.

 In 2000, approximately 7 percent of the U.S. corn crop was used to produce ethanol. By 2010, that number had risen to 39 percent. And it will continue to rise until we shift from corn ethanol to advanced biofuels that lower pollution and do not distort markets for food and feed.

 Another flaw with current policy: Ethanol tariffs make our country more dependent on foreign oil. The tariffs are more than 14-cents-per-gallon higher than the ethanol subsidy they supposedly offset. This lack of parity means imported ethanol suffers a competitive disadvantage against imported oil. By leveling the playing field between imported oil and imported low-carbon ethanol, my bill would diversify our fuel supply, replace oil imports from OPEC countries with low carbon sugarcane ethanol from Brazil, India and Australia and expand our trade relationships with democratic states. The costs of ethanol subsidies and tariffs far outweigh the benefits.

The Center for Agricultural and Rural Development at Iowa State University recently estimated that a one-year extension of the ethanol subsidy and tariff would lead to only 427 additional direct domestic jobs at a cost of almost $6 billion, or roughly $14 million of taxpayer money per job. According to a July 2010 study by the Congressional Budget Office, ethanol tax credits cost taxpayers $1.78 for each gallon of gasoline consumption reduced, and $750 for each metric ton of carbon dioxide equivalent emissions reduced.
Developing and growing clean energy sectors are important goals, but we must do so responsibly. Eliminating the corn ethanol subsidy, lowering import tariffs and supporting non-corn ethanol are all steps that move us in the right direction.

Source: U.S. Senator Dianne Feinstein (D-Calif.)

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Charlie Peters    
Hayward  |  April, 26, 2011 at 05:52 AM

Audit the fed, support HR 459 Paul

Charlie Peters    
Hayward CA  |  April, 23, 2012 at 02:04 PM

Clean Air Performance Professionals 21860 Main Street Ste A Hayward, California 94541 Monday, April 23, 2012 California senior Senator Honorable Dianne Feinstein San Francisco office One Post Street San Francisco. CA 94104 (415) 393-0707 / (202) 228-3954 RE: NO on SB 1396 Dutton & AB 523 Valadao unless amended. Good morning Senator Feinstein, Federal ethanol policy increases Government motors oil use and Big oil profit. It is reported that today California is using Brazil sugar cane ethanol at $0.16 per gal increase over using GMO corn fuel ethanol. In this game the cars and trucks get to pay and Big oil profits are the result that may be ready for change. We do NOT support AB 523 or SB 1396 unless the ethanol mandate is changed to voluntary ethanol in our gas. Folks that pay more at the pump for less from Cars, trucks, food, water & air need better, it is time. The car tax of AB 118 Nunez is just a simple Big oil welfare program, AAA questioned the policy and some folks still agree. AB 523 & SB 1326 are just a short put (waiver) from better results. Thank you for your life time of service. Clean Air Performance Professionals (CAPP) / An award winning coalition. Charlie Peters Cc: interested parties CAPP contact: Charlie Peters (510) 537-1796

Midwest  |  April, 26, 2011 at 10:30 AM

If ethanol cant compete with $4 gas without the subsidy then it never will be viable. Its time we see value in our livestock sector and stop unfairly penalizing them.

wYOMING  |  April, 26, 2011 at 01:34 PM

WELL SAID!!!!!!!!!!!!!!!!!!!!!!!

larry bramblett    
elberton ga 30635  |  April, 26, 2011 at 10:36 AM

Senator Feinstein is right on the money. The total cost of producing ethanol has never added up. The cost of corn is devestating to producers of all meat ( white and red). The US government has screwed up bad on this one .

Ruel Barker    
Provo, Utah  |  April, 26, 2011 at 02:09 PM

Senator Feinstein's article on ethanol is right on. Eliminating this subsidy should be a top priority for both side of the aisle. This is one piece of legislation that both parties should agree on. Every since this ethanol thing started it has put agriculture in a tail spin. How can we in good conscience subsidize a process that encourages using a food commodity as precious as corn to make fuel to burn.

Jake Hardy    
Vale, N.C.  |  April, 26, 2011 at 02:59 PM

Amen to Sen. Feinstein. I watch ethanol crunch my family's cattle operation. If this happened fairly, then it would simply be a product of a free marketplace. This was unfair. Taxpayers are forced to subsidize ethanol!

Idaho presently  |  April, 26, 2011 at 08:17 PM

why has it taken so long? Get it done and quickly. Many family animal Ag operations are gone or about to go under, to say nothing about the millions in lost equity in the last few years of ridiculous feed and by-product costs.

Huron SD  |  April, 30, 2011 at 10:13 PM

I think that if we take away the subsidies for ethanol that would be OK if we take away the subsidies for fossil fuels. There are many ways that fossil fuels in many ways and if it were not for that fact the price of gas would be higher and ethanol would compete. The evidence of these subsidies is the fact that gasoline in the US is very inexpensive when compared to much of the world.

Nadine A Blosat    
Grover Beach, Ca 93433  |  May, 08, 2011 at 05:16 PM

THANK YOU so very much for attempting to eliminate the Ethanol subsidy. This has an item that has disturbed me since Bill Jones walked away with 7 million dollars after his involvement with Pacific Ethanol. We need corn for our cereals and the tables of our country. I do support you in this endeavor and hope MANY OF OUR FINE LEGISLATURES AGREE WITH YOU. Nadine Blosat Grover Beach, Ca 93433-3130

Missouri  |  June, 03, 2011 at 12:08 PM

So we're throwing in with Dianne Feinstein now??? For the record, the subsidy needs a review. It's the oil companies that get the money, not the ethanol producers. BUT - Sounds to me like we'd like to head back to the good ole days when crop producers were subsidized to continue producing a product for less than the cost of production. Who was actually being subsidized? I'll tell you. It was the livestock producer, and I'm one of them.

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