Plain Target Versus Imbedded Subsidies

By Mike Bryan | July 22, 2011

To say I find it astonishing that the Volumetric Ethanol Excise Tax Credit is likely to be cut by Congress while leaving the subsidies for the oil industry in place, would be a gross understatement. It’s unimaginable that Congress cut the provisions for a domestically produced, environmentally sustainable renewable fuel without touching Big Oil.

In the final analysis, the ethanol industry will survive and perhaps will look back at this as a blessing. It will be one less tool in the arsenal of our opposition to use against us. It’s the principle of the thing that really is just wrong. At the risk of repeating the obvious, the oil industry is one of the most profitable industries in the world, making billions of dollars a year, and Congress cut ethanol subsidies.

How could that possibly happen, one might ask? In my opinion, it’s from a Congress that has lost its direction, a Congress that appears to be more concerned about re-election and revenge than it is in doing what’s best for the country. This is not the kind of representation that most of us expected when we went to the polls.

I suppose it’s understandable, given the fact that the subsidies provided under VEETC were straightforward and easily identifiable on Congress’s radar screen. The subsidies provided to the oil industry, on the other hand, are much less obvious. From drilling subsidies, to oil depletion allowances and foreign tax credits, the subsidies for Big Oil are so deeply imbedded in the budget that it would actually take some work to ferret them out and eliminate them. Ethanol was right there in plain sight with a bullseye painted on its back.

Ethanol now constitutes nearly 10 percent of America’s gasoline supply. It’s even been adopted by NASCAR as its fuel of choice. (Visit http://www.youtube.com/watch?v=hKSFqVN6EVofeature=related) Clint Bowyer, NASCAR sprint driver said, “If it (ethanol) can withstand what we put it through on race day, it can certainly withstand the highways.” Ethanol has become a vital part of our automotive liquid fuel requirements. So, the action of Congress to abandon this American-made renewable fuel is mystifying to say the least.

We all know that ethanol will survive and prosper without VEETC, but the sting of being singled out by Congress as a fuel that should be penalized over Big Oil, will remain in our memories for a long time to come. We all hope and anticipate that in the months ahead measures will be taken to put mechanisms in place that will help to not only sustain the ethanol industry, but to provide a platform for long-term growth.

That’s the way I see it.

Author: Mike Bryan
Chairman, BBI International
mbryan@bbiinternational.com