U.S. Jim Webb, D-Va., today called for an end to costly ethanol subsidies and tariffs. In a bipartisan letter, Sen. Webb and other senators urged Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Kent., to eliminate the protections currently manipulating ethanol costs and restricting U.S. trade. The current subsidies and tariffs on domestic ethanol are set to expire on Dec. 31.
“Eliminating or reducing ethanol subsidies and trade barriers are important steps we can take to reduce the budget deficit, improve the environment, and lessen our reliance on imported oil,” said the senators. “Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use. Ethanol may be the only product receiving all three forms of support from the U.S. government at this time.”
Currently, the United States has a 54 cent-per-gallon tariff on ethanol imports and a 45 cent-per-gallon subsidy on blending ethanol into gasoline. In addition, the Federal Renewable Fuels Standard mandates an annually increasing usage of corn ethanol. These protections are expensive and redundant.
“We cannot afford to pay industry for following the law,” said the senators, noting that subsidies would cost taxpayers at least $31 billion over the next five years.
In a 2009 letter, Sen. Webb recommended the Environmental Protection Agency examine more closely the negative effects ethanol protections have on other sectors of the economy. Ethanol subsidies have led to steep increases in the price of corn and other sources of feed, which have negatively affected beef cattle, dairy and poultry producers and driven up the cost to consumers of commodities like milk and eggs. He also sent a letter to Secretary of State Hillary Clinton and U.S. Trade Representative Ron Kirk expressing concerns over the ethanol tariff.
Edited by Chris Graham. Chris can be reached at [email protected].
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