Congressional showdown looms on corpulent ethanol subsidies

December brings the biggest showdown with Illinois' and possibly the
nation's most gluttonous corporate freeloader: the corn ethanol
industry.

Symbolically, the upcoming battle of budget hawks
against ethanol's special pleaders is as significant as the fight over
continuing the Bush tax cuts.

At issue is whether Congress will
allow corpulent ethanol subsidies and a tariff against some imported
ethanol to expire on Dec. 31. The ethanol industry has been tromping
around Washington
like starving bears, hoping to get the deal done during this lame-duck
session of Congress, before budget-cutting hunters arrive in the next
Congress.

Ethanol's supporters assert that it is an
environmentally friendly, renewable and cost-effective gasoline
additive. Its opponents dispute it on every point, arguing, among other
things, that ethanol costs more than gasoline to make, raises food
prices, increases tailpipe pollution and encourages cultivation of
fragile lands. But dare to question ethanol, which consumes 41 percent
of the corn crop, and snowstorms of studies are produced, from both
sides. Clearly, the science supporting ethanol is "unsettled." Which
makes spending billions of taxpayers' and consumers' dollars on ethanol
at best a costly crapshoot.

Despite that, the Environmental Protection Agency
recently decided that we aren't consuming enough of it. Instead of
mandating that 10 percent of gasoline sold at the pump be ethanol, as
has been required for years, the EPA issued its so-called E15 rule,
which raised to 15 percent the allowable blend of ethanol for cars and
certain trucks built since 2007. In that, the EPA ignored studies
pointing to the harmful effects that 50 percent increase will have on
cars, including the agency's own conclusion that it would damage the
catalytic converters of tens of millions of cars now on the road.

  Despite that, the Environmental Protection Agency
recently decided that we aren't consuming enough of it. Instead of
mandating that 10 percent of gasoline sold at the pump be ethanol, as
has been required for years, the EPA issued its so-called E15 rule,
which raised to 15 percent the allowable blend of ethanol for cars and
certain trucks built since 2007. In that, the EPA ignored studies
pointing to the harmful effects that 50 percent increase will have on
cars, including the agency's own conclusion that it would damage the
catalytic converters of tens of millions of cars now on the road.

Wait, that's only the start. The ethanol industry also receives a tax
credit amounting to 45 cents a gallon and is aided by a tariff on
sugar-cane ethanol valued at 54 cents. In addition, the 2007 energy act
mandates the use of renewable fuels, including ethanol: 10.5 billion
gallons in 2009, 14 billion in 2011 and 36 billion by 2022.

This
is extraordinary. And insane. Here, the government creates a fake market
for ethanol, then subsidizes the market, and then protects the market
against foreign competition.

This has to stop. But don't count on it.

Agribusiness is an American biggie, especially in Illinois, loaded as we are with ethanol giant Archer Daniels Midland Co.,
commodities markets, corn farmers and countless refiners, processors,
haulers and investors. Their people sit on important corporate boards
and their campaign contributions flow into Congress and state
legislatures. Even cost-cutters will pretend not to notice the need to
carve away at this turkey, one of the most heavily subsidized businesses
in America. And, I haven't even mentioned the tens of billions of
federal dollars that go for crop subsidies and other boons for wheat,
cotton, sugar, peanuts, dairy, wool and other types of farmers.

Critics
of these subsidies get it from the right and the left. But opposing the
subsidies is a growing coalition from the right and left. Among them
are the Natural Resources Defense Council, Environmental Working Group,
Small Business and Entrepreneurship Council, National Petrochemical and
Refiners Association, International Dairy Foods Association and Grocery
Manufacturers Association. As their Web site (followthescience.org)
illustrates, they are united in their opposition to the EPA's E15 rule
for a variety of environmental and economic reasons, including, no
doubt, their own self-interest. The coalition earlier this month filed a
federal lawsuit charging that the EPA exceeded its statutory powers by
issuing the rule.

Now comes Al Gore
admitting that he was wrong to support corn-based ethanol subsidies,
calling it "not a good policy." In this stunning confession at a recent
green energy business conference in Athens, Greece, he said his
presidential ambitions explain his original support: "One of the reasons
I made that mistake is that I paid particular attention to the farmers
in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president."

Now
that Gore isn't running for anything, such an admission comes easier.
The problem is that members of Congress are running for their lives, and
their ethanol vote will be one of the earliest tests of whether they
will survive.

 

 

Comments

Leave a comment
  • I see that archer daniels is a big benefactor of this ruling,but is this a payback fr the food safety bill? monsanto is the big winner there.What is it with those knuckleheads in dc? Are tey looking for more control?? We need to eliminate all subsidies for one year and then go back and see which one are even needed.The last time they mandated an ethanal increase we saw a sharpe increase in food prices for which they then scratched their block heads and wondered why.I guess we won't need to drive anywhere after we're all out of work but then can't grow your own food because it'll be against the law with S.510 in place.Get out of the way washington,please.....

Leave a comment

  • ChicagoNow is full of win

    Welcome to ChicagoNow.

    Meet our bloggers,
    post comments, or
    pitch your blog idea.

  • Advertisement:
  • Visit my new website

    I'm a freelance writer, editor and author. I can help you with a wide variety of projects. Check out my new website at www.dennisbyrne.net

  • Meet The Blogger

    Dennis Byrne

    Chicago Tribune contributing op-ed columnist and author of forthcoming historical novel, "Madness: The War of 1812." Reporter, editor and columnist for Chicago Sun-Times and Chicago Daily News. Freelance writer and editor.

  • Subscribe to The Barbershop

    Enter your email address:

    Delivered by FeedBurner

  • Dennis Byrne’s Facebook Fan Page

  • Categories

  • Like me on Facebook

  • Our National Debt

  • Twitter

  • Tags

  • Recent Comments

    • In reply to jack:
      I don't understand? Of course, the judge had no choice. It's the progressives who were arguing that she shouldn't be ...
      Read the story | Reply to this comment
    • In reply to Kathy Mathews:
      Well, how about Obama not following the law as written in Obamacare. Oops, that isn't coming next; that's already happening.
      Read the story | Reply to this comment
    • In reply to Kathy Mathews:
      It is simpler than that. It is a given part of injunction law, one I'm sure Dennis doesn't understand, that ...
      Read the story | Reply to this comment
    • The best thing I read about this was in a tweet. Somebody compared Kim Davis to Rosa Parks. And one ...
      Read the story | Reply to this comment
    • fb_avatar
      The judge asked Davis whether she'd been raising money for her defense. She said while she'd not been asking for ...
      Read the story | Reply to this comment
  • /Users/dennisby/Desktop/trailer.mp4
  • Latest on ChicagoNow

  • Advertisement: