What kind of Republican supports high tariffs on imports, dubious green tax credits, and consumption mandates to prop up unprofitable environmental darlings? The ethanol-loving midwestern kind, especially the ones running for president.
Currently, imported ethanol is slapped with a 54-cent-per-gallon tariff, while oil companies receive a 45-cent tax credit per gallon of ethanol blended into their gasoline. Both the tariff and the tax credit have just been extended for another year, thanks to a bipartisan push from Cornbelt politicians. In case these provisions aren’t enough to help the industry hobble its way to satisfying profits, lawmakers also decided to mandate that U.S. consumption of renewable fuels (which will certainly be almost entirely corn-based and cellulosic ethanol) reach 36 billion gallons by 2022. And that’s just the assistance provided on the federal level.
Advertisement
There are four potential midwestern 2012 Republican presidential nominees: Minnesota governor Tim Pawlenty, Indiana governor Mitch Daniels, South Dakota senator John Thune, and Indiana congressman Mike Pence. When it comes to doling out favors to the ethanol industry, none of them can credibly claim his attitude was “just say no.”
Does it matter? Absolutely: As this year’s tariff and tax-credit extensions showed, even a Tea Party–driven small-government surge can’t stop politicians from kowtowing to the ethanol lobby. Further, a Republican president who is willing to carve out exemptions for ethanol interests will lack credibility when he battles spending or tax breaks benefiting other special interests. And finally, while some claim that ethanol will allow our nation to achieve energy independence, the fact that the highest approved corn-gas blend is only 15 percent ethanol (and is approved only for certain automobile models from 2007 or later) suggests that an America running on corn is unlikely in the extreme.
Let’s examine some midwestern GOP politicians’ records on ethanol.
Mitch Daniels
When Mitch Daniels was sworn in as governor in January of 2005, there was one ethanol plant in Indiana. Now there are twelve operating plants and a thirteenth set to start running early next year. This isn’t an accident: Daniels aimed to increase Indiana’s annual ethanol and biodiesel production to 1 billion gallons by 2008. Once that thirteenth plant begins producing, Indiana will have met the goal.
Under Daniels’s leadership, Indiana has aggressively courted the ethanol industry. “He’s been a huge supporter of building ethanol plants . . . and also [has tried] to encourage consumers to buy ethanol,” says Indiana political analyst Ed Feigenbaum, adding that much of the new industry “has come at the cost . . . of state subsidies.”
The Indiana Economic Development Corporation, which is chaired by Daniels, has offered ethanol plants tax credits and training grants. Consider the package offered to the Hartford-Bio-Energy ethanol plant. It included “up to $32,000 in training grants for Indiana resident employees, $100,000 in infrastructure assistance to the local community, and up to $1.4 million in tax credits based on anticipated employment and capital investment levels,” announced an IEDC press release. In 2006, Daniels signed SEA 353, which upped the maximum tax credit available for ethanol production and biodiesel production and blending from $20 million to $50 million.
As of this year, Indiana offers existing ethanol plants a tax credit of twelve-and-a-half cents per gallon produced, with production-based caps on the credit ranging from $2 million to $20 million.
Daniels has also actively promoted ethanol-based fuels. In 2005, he signed a law mandating that state employees operating government vehicles use ethanol or biodiesel fuel whenever possible. That same year, he announced the conversion of the rural town of Reynolds, Ind., to “BioTown, USA.” The plan was that BioTown would eventually use only renewable energy. The first phase included installing an E85 pump and encouraging residents to buy flex-fuel vehicles. Daniels hoped BioTown would become a model for other Indiana towns, but it’s now generally considered a failed experiment.
Any Republican who is still for ethanol, even after *Al Gore* finally admitted the truth, should be automatically disqualified as a GOP Presidential candidate. They are clearly just not serious.
Yes, it is oh so much better to fund Venezuela, Saudi Arabia, and Iran while causing a need for larger military force. That "free marketers" take no account of the externalities of their policies shows just how blinkered they are.
[sarcasm on]To bad the US doesn't have any domestic oil available to drill for. That would lessen the money going to our enemies as well as the subsidies to our friends.
Yep, too bad we have no oil. Or coal.[sarcasm off]
I'd rather be "blinkered" than be so "brilliant" as to support the increased use of an energy source that increases the cost of both fuel and food significantly with no environmental benefit to speak of.
Talk about externalities! Ethanol production actually INCREASES greenhouse gas emissions! All that extra corn is grown and cultivated with machinery that runs on 100% diesel or traditional gasoline. Plus, all the extra land used to cultivate corn reduces our resources even further.
So, there is a NET NEGATIVE EFFECT on the environment from ethanol production. Perhaps supporting such an industry is "blinkered", whatever that means.
We should get our energy right here at home, and not from food products, which causes the price of corn and grain to skyrocket. Production of oil and natural gas reduces our dependence on foreign oil, expands our national energy industry and helps our economy, and that energy will be produced under regulations and with technology that enable us to produce energy cleaner than just about anywhere in the world.
So while the political left hopes and prays that wind mills and solar panels save the day, traditional energy sources will still be needed, and they may as well be produced right here, where we have an abundant demand, clean technology to produce it, a need to reduce our dependence on nations that want our people dead, and a need to put millions of people back to work.
Cripes, that's just baloney, madisonian. It doesn't have a net negative effect, although that's a popular nonsensical rant from the oil apologists who want to keep doling out billions to Chevron, BP, Exxon, etc. while taking away the support from anything that challenges the oil barons.
You paid for more in imports from the Middle East last month than you did for ethanol all year.
We have all the fuel we need buried in oil and gas reserves designated as wilderness areas in the US. All it needs is refinining to make the most fuel efficient system excluding nuclear. Instead we have this green nonsense of ethanol and biofuels that consumes more energy to produce than simply harvesting and refining hydrocarbons. To read the full context: www.silversmithpress.com
featured article
I am a professional chemist-- until these politicians choose to learn the basic chemistry of combustion- all they spout is nonsense. It's disappointing to hear these Republicans spin -- because it has no basis in energy reality
It takes 1.5 gallons of gasoline to produce 1 gallon of ethanol. 99% of cars/trucks run like hell on 10% ethanol added to gas much less E85. All small engines weedeaters, blowers will only work a very limited time where ethanol is add to gas. It is a subpar replacement for gasoline. If you do not want to buy from foreign countries then drill on the millions of acres the US gov. is buying up.
No candidate supporting ethanol subsidies will get my vote. It is a counterproductive policy. I know politically that these subsidies are hard to resist but this is a key litmus test for who's serious about debt.
I think that after ten or twenty years at the Federal teat, Ethanol should be an industry that could stand on its own.
It apparently isn't.
Is Ethanol an industry of such national importance that we need to prop it up (forever, or at least for the foreseeable future) with subsidies? I think the answer is "no", but I'm not the only one with a vote.
Mostly, I've only seen arguments AGAINST ethanol subsidies. Someone must be putting forth arguments FOR ethanol subsidies, because the subsidies continue. Could we have a serious debate here on NRO with proponents and critics of the industry???
Sounds like Pence comes out cleaner than the others on this issue. I'm disappointed that he's not stronger in his opposition, but the fact is that the midwest is more Christian-populist than ideologically conservative. You do have to butter the voters up a bit to keep them from breaking for a moderate Dem.
Ethanol is garbage, but it's not as damaging to the economy as other programs (e.g. Obamacare). I could tolerate some practical politicking on this issue in exchange for an otherwise doctrinaire conservative agenda.
The active support of the other candidates, though, is troubling.
Any justification for the ethanol subsidies has long since past. It is disappointing to see Daniels among the supporters of it. This is a classic example of what happens when you try to run the economy from Washington D.C., something Republicans fall for all most as much as Democrats.
Using the Pelosi model (any financial statement becomes true when I say it; ref. "unemployment increases spending"), I propose my new business venture.
I will buy (something) for $10., and sell it for $8.00.
Sales volume will be high, because my price is 20% less than the competitive rate.
The administration subsidizes my cost by $9.00, ruining my competitors, and resulting in a profit to me of $1.00 even if sales volume is zero, and a profit of $9.00 for any actual sales.
A special bill allows me to write off the entire "cost" ($8.00) against current profits, so I get a tax rebate as well for negative income.
The subsidy is a "loan" with no interest, which will never be repaid, but instead credited against my "infrastructure and capital improvements" consisting of my new car, boat, summer home and art collection.
Once Again,
The problem of course is we will never produce enough ethanol to make a real dent in oil use. It is a dead end. While something that would indeed lower imports - increased exploration and drilling - is not allowed.
The tea parties will not support a candidate who has ethanol on his hands. This is a fatal defect in these politicians' resumes. The only hope they have is that the Republican Congress ends the subsidies by 2012.
Given the many, many "facts" posited by the commenters, I think it makes sense to have a fact-checked debate about this issue.
Why is it that our politicians are willing to vote for Ethanol subsidies? They should be willing to give their arguments and let's let all (or most) of the relevant facts come to light.
["Seriously, this entire debate starts with OIL subsidies. Get rid of those, then you can get rid of ethanol subsidies."]
What unique subsidies do oil companies get? My understanding is that these subsidies are mainly being able to deduct business expenses (like oil exploration costs) from their income, like every other company. Is this incorrect? Are there direct subsidies to oil companies comparable to those ethanol companies get?
Follow
