Wanna cut the federal budget deficit? Start with ethanol subsidies!

Here’s a good way to cut $7.7 billion from the federal budget :

Former U.S. vice-president Al Gore said support for corn-based ethanol in the United States was “not a good policy”, weeks before tax credits are up for renewal.

U.S. blending tax breaks for ethanol make it profitable for refiners to use the fuel even when it is more expensive than gasoline. The credits are up for renewal on Dec. 31.

Total U.S. ethanol subsidies reached $7.7 billion last year according to the International Energy Industry, which said biofuels worldwide received more subsidies than any other form of renewable energy.

“It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol,” said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.

“First generation ethanol I think was a mistake. The energy conversion ratios are at best very small.

“It’s hard once such a programme is put in place to deal with the lobbies that keep it going.”

In a moment of rare honesty from an elected official (or in this case, a former elected official), Gore admitted his support of ethanol subsidies was based on his own political ambitions:

“One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

While I generally support the idea of government supporting and encouraging innovation whenever possible, I can’t see any reason to continue to subsidize ethanol, an energy source that simply doesn’t make sense from a financial or environmental standpoint.


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1 thought on “Wanna cut the federal budget deficit? Start with ethanol subsidies!

  1. Absolutely. E85 costs so much less than other gas blends. The reason for that is the subsidies, which make it obnoxiously cheaper at the pump. While it looks cheap, it’s not an indication that E85 is actually any less expensive to produce. In fact, it’s not. The massive subsidies make it look like a bargain, but we all pay for that in the long run.

    What’s sad is that ethanol has even less energy in it than regular gasoline, so you need to burn more of it to go the same distance that you would on regular gasoline. (Biodiesel has more still than gasoline, and D2 petroleum diesel has more still.)

    Given that the ethanol subsidy was created by lobbyists, what do you bet those same lobbyists would be working double time to try and stop its repeal?

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