Corn Growers’ Association CEO on Ethanol Subsidies

by Brian McGraw on May 18, 2011

in Blog, Features

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On E&E TV. The title mistakenly claims that the NCGA supports ending ethanol subsidies, which they don’t. They are willing to give up a specific tax credit in exchange for different government subsidies or incentives to continue lining their pockets with taxpayer dollars by encouraging ethanol production.

Rick Tolman, the CEO, discusses the reasons the corn industry has come under attack, noting that they have moved into selling a lot of corn for ethanol production. He kind of hides the whole reason for this, which are the corn ethanol production mandates, preferring to vaguely refer to “productivity improvements” which allowed them to also begin exploring additional markets. Unfortunately, markets are blind to everything except prices, so if the mandates had been stringent enough, corn would be converted to ethanol even if we weren’t producing enough additional corn to meet other needs.

He also notes that the oil industry is very upset that the ethanol industry has taken about 10% of their market. Well of course they’re upset, as they should be. There’s no other industry (energy) in America that I can think of which is so heavily reliant on government policies for their existence. Imagine if the government began requiring that 10% of your daily calories come from Starbucks? Isn’t it reasonable that every other food industry (to say nothing of citizens) in America would be justifiably furious? Note that ethanol already has its own E-85 market through flex-fuel vehicles, and its very small, because ethanol is more expensive than gasoline.

Finally, Tolman finishes with the usual line of “they don’t need the tax credits,” while supporting the introduction of new, more expensive subsidies  — for more flex fuel vehicles, federal money for pipelines, the renewable fuel standard, EPA support for higher fuel blends despite the number of problems associated with higher ethanol blends, etc. These are all subsidies. They claim to be willing to “reform” or “give up” the VEETC in the form of replacing it with more wasteful taxpayer dollars funneled into an industry that might never survive on its own (at least at 11 billion plus gallons per year). And they keep getting away with claiming that they don’t want subsidies anymore, while deflecting blame toward the oil industry.

If ethanol was indeed amazing, it wouldn’t have to go through the oil industry. The oil industry would be begging for the 15% gasoline blend in E-85. Gasoline stations would install E-85 pumps on their own accord. This isn’t happening, even with record high gas prices, because ethanol isn’t an efficient fuel, and hasn’t been for over 100 years.



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