Ethanol Votes Draw Plenty of Reaction

Feinstein amendment ending ethanol subsidy may not make it to law but it sends a message on the Senate's mood regarding support.

Published on: Jun 17, 2011

"President Obama has outlined a plan to reduce our oil imports by one third by 2025. Biofuels play a central role in this plan, which is why this administration continues to support and invest in the development of these important, domestically produced fuels," says Ag Secretary Tom Vilsack, in response to a vote Thursday by the U.S. Senate to end ethanol subsidies immediately - a full six months earlier than scheduled.

The vote - for an amendment from Sen. Dianne Feinstein - was opposite the vote for a very similar amendment offered by Sen. Tom Coburn, R-Okla., earlier in the week. Turns out the procedural wrangling and the games Coburn played to get his amendment to the floor led to defeat, but the Senate is in a cost cutting mood, so a nearly identical amendment passed just a couple days later.

The abrupt end of the subsidies ethanol supporters reacting swiftly. The National Corn Growers Association issued a statement after the vote noting: " that the Senate allowed petty politics to trump prudent policy in the fight for the future of the ethanol industry. The passage of Sen. Dianne Feinstein’s amendment to immediately repeal the Volumetric Ethanol Excise Tax Credit represents a tax increase on fuel that will kill jobs in rural America and hit all consumers in the pocketbook, NCGA said.

“Today the Senate voted against rural America and domestic, renewable energy, and in favor of more foreign oil,” NCGA President Bart Schott, a grower from Kulm, N.D., said. “Sen. Feinstein has unfairly hit at the heart of an important agricultural industry while remaining unified with subsidy-laden Big Oil.”

Schott pointed out that one comprehensive report found that subsidies for the oil industry total up to $280 billion annually, representing up to $2 per gallon of gasoline. A recent legislative effort to eliminate $2 billion of these oil subsidies went nowhere in Congress, he noted, after organizations like the National Taxpayers Union painted it as a tax increase.

Livestock producers happier

Ending the subsidy - called the Volumetric Ethanol Excise Tax Credit, and the 54-cent tariff on imported ethanol, if it were to become law, was good news to the National Cattlemen's Beef Association. NCBA President Bill Donald remarks that "the VEETC and the tariff on imported ethanol have put cattlemen and other end-users of corn at a competitive disadvantage to the corn-based ethanol industry when it comes time to buy a bushel of corn. Repealing the VEETC and the import tariff are important steps to fully leveling the playing field. We commend the 73 U.S. Senators who supported the Feinstein/Coburn amendment,” Donald said. “Cattlemen aren’t opposed to ethanol. In fact, we support our nation’s commitment to reducing our dependence on foreign oil. But after 30 years and more than $30 billion in taxpayer support, the day has come to let the mature corn-based ethanol industry stand on its own two feet.”

Donald said with tight corn supplies and high prices, all end-users of corn should compete on equal footing for every bushel. He said a recent U.S. Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report is further evidence that it’s time to stop propping up the corn-based ethanol industry. According to the monthly report, 1.5 million fewer acres of corn will be planted and 1.9 million fewer acres of corn will be harvested in the United States this year leaving worldwide stockpiles at tight levels.

However, Illinois Corn Growers Association President Jim Reed, a farmer from Monticello, Ill. notes that "in a move that allowed politicians to cross 'reduce the Federal deficit' off their to-do lists today, Senators added a huge question mark to the average American's household budget.

"The Senate passed an amendment that would institute the immediate repeal of the ethanol credit and import tariff, a full six months earlier than Congress had made a handshake agreement on with rural America, leaving a lot more questions than answers. Although the bill to which this anti-ethanol attack is attached will likely never become law, the vote indicates an incredibly surprising willingness of Senators to raise prices at the pump for hundreds of millions in America," he says.