As I recently noted, even as the Obama administration is trying to wring money out of BP, Nancy Pelosi & Co. are putting $600 million a year into the enviro-offender’s pockets through the ethanol program (aka corn gas). BP, along with the other oil companies, gets a fat tax credit for blending corn gas into its gasoline. As has been voluminously and lavishly documented, this unicorn ranch of a program is a ridiculous waste of money, subsidizing a non-viable fuel that is bad for the environment and bad for the economy and pretty much bad for everybody except BP, Shell, Hugo Chávez, and Archer Daniels Midland.

But this is politics, so there’s always room to make things worse: Madame Speaker, Harry Reid, and President Obama are at the moment trying to buy themselves a carbon-cap bill, and the price keeps going up. In need of greasing the wheels with some Midwestern Democrats (you know, the kind with constituents who wear meshback trucker caps non-ironically) backers of the carbon caps are planning to pack into the bill a long-term extension of the VEETC — that’s Volumetric Ethanol Excise Tax Credit, or, as I like to call it, the Let’s Give Away a Bunch of Taxpayers’ Money to Some Well-Connected Corporate Yahoos Program. Ethanol subsidies run into the low billions: big enough for a few people to fight for, but not big enough for very many to fight against — a classic case of concentrated benefits and dispersed costs.

This new extension of the corn-gas giveaway comes on the heels of a Congressional Budget Office report on Washington’s ethanol shenanigans, the findings of which are bracing. First, there’s the environmental aspect: “Producing ethanol from corn requires much more energy from natural gas or coal than does producing petroleum fuel, cellulosic ethanol, or biodiesel. . . . Because the production of ethanol draws so much energy from coal and natural gas, it can be thought of as a method for converting natural gas or coal to a liquid fuel that can be used for transportation.” Translation: Your ethanol-powered car is actually a coal-powered car. Congratulations, Moonbeam: You should have bought a diesel.

More to the point of our concerns here, there’s the financial impact. How much do the subsidies distort the energy marketplace? CBO says: “CBO calculated that if no other biofuel policies were in place, eliminating the biofuel tax credits would reduce ethanol consumption by 32 percent and biodiesel consumption by 38 percent.” Only a third of the market? Sure, but that’s just the impact of current subsidies. You have to consider that years of subsidization created a whole ethanol infrastructure that probably never would have existed. CBO: “Determining the share of biofuel production that depends on the current federal biofuel tax credits is complicated by the history of support for biofuels and the blending mandates established by the Energy Independence and Security Act. Earlier subsidies supported the development of biofuel production facilities. More recently, EISA’s blending mandates have encouraged continued investment in such facilities by providing greater certainty to investors that there will be a market for their product. Because of those factors, the amount of biofuel consumption today that is attributable to the current tax credits is smaller than it would be if the facilities for biofuel production had not already been built—in part because of previous tax credits. In other words, current consumption of biofuels would probably be much less if the tax credits had never existed than if the credits were removed now, after the existing production capacity has been built.” What is seen and what is not seen: Frédéric Bastiat showers scorn upon us from economist heaven.

Particularly telling is that bit about ensuring investors that there will be a market for their products — kind of like Fannie Mae and mortgage-backed securities. Uncle Sam will buy any old junk, or pay somebody else to buy it — or, in the case of ethanol, pass a law forcing people to buy it. There’s a word for people whose markets are ensured by the government, and that word is not investor — it’s crony.

The Environmental Working Group chimes in with a keen observation: “It costs taxpayers $1.78 to reduce gasoline consumption by a single gallon by substituting corn ethanol. The Department of Energy says the retail gasoline price currently averages $2.78. So ethanol’s $1.78 a gallon cost to taxpayers is two-thirds of the retail price of gasoline.” In other words, in addition to the three bucks you’re paying at the pump, you’re paying another $1.78 in hidden subsidies.

Bottom line: Ethanol represents $5.5 billion a year tacked onto the federal deficit. For scale: $5.5 billion is bigger than the Transportation Security Administration’s 2010 budget and about the same size as the U.S. bottled-water market, Microsoft’s annual R&D spending, or U.S. aid to Africa. All for corn gas. Add to that untold billions in opportunity costs, and remember that a good chunk of the money ends up in the pockets of people we should not be especially keen to enrich. I don’t have any particular beef with the oil companies or ADM, but they’re big boys and they should be able to take care of themselves without taxpayer subsidies. Hands out of my pocket, Tony.

Also, it would be great if we would not be subsidizing these guys while they suck up to Gaddafi.

– Kevin D. Williamson is deputy managing editor of National Review.