Drew Dowdell - CheersandGears.com
After 30 years, the ever increasing subsidy for ethanol produced from corn has expired. When Congress adjourned for the year last week, they did not renew the ethanol subsidy that has cost taxpayers some $45 billion during its lifetime. Every gallon of ethanol pumped provided corn growers with a 45 cent subsidy. Most of the savings from ending the subsidy to go towards reducing the US's budget deficit.
At the same time, a 54 cent per gallon tariff on ethanol imported from Brazil also expired. Brazil is twice as productive per acre of farm land by using sugar cane rather than corn. The expiration of the Brazilian ethanol tariff is unlikely to cause a rush of imported fuel as sugar prices in that country have spiked recently.
Earlier this year Congress blocked EPA approval of E15 gasoline for use in all vehicles from 2001 and newer. E15 is a blend of 85% petroleum gasoline and 15% ethanol. Automakers unanimously protested the use of E15 in engines not designed for ethanol saying that the effect of the fuel on older engines could not be predicted. They did not want to be blamed for any engine failures caused by the new fuel.
The ending of the subsidy clashes with a 2007 Congressional mandate that requires 15 billion gallons of bio-fuel be used in 2015 moving up to 36 billion gallons in 2022.