Still it is only a tax credit vs. a subsidy. So you have to break even or make money before tax is even an issue.

Also, large oil companies have bought up significant stakes in ethanol producers in Brazil and guess what, they haven’t been making the kind of investments in production capacity they should have been (surprise, surprise!).

However, these innovations require investment. It should be noted that investors are not speculators; businessmen not gamblers. Nobody is going to invest millions of dollars in an enerprise to break even (because in part, oil prices still fluctuate wildly due to he actions of speculators) making forecasting revenues and therefore profits very difficult. Keeping a business in the black is not a matter of the average trend over a period of several years. As I said above, since the vast majority of the production capacity of the ethanol industry is less than 10 years old this means that most of (the most efficient by the way) ethanol producers have very large fixed costs in the form of debt payments. All you need is a quarter or two of inadequate revenues or costs slightly higher than projected and you can be introuble with your creditors and be forced into bankruptcy.

No investor, no businessman commits time and treasure to go into bankruptcy or to make a few cents on the dollar. If you are assuming considerable risk you want adequate compensation. And that is more than breaking even or making a few percentage points more than you would in Treasury Bills.

The real reason for the assault on ethanol is that it is cutting into the Oil industries profits by reducing the price of gas. Francisco Blanch, Chief Commodities Strategist for Merrill Lynch said (Wall Street Journal, April 2008) ethanol is bringing down the price of gas about 15%. So, while the Blenders Tax Credit for Ethanol cost about $6 billion in 2010 ethanol saved us about $70 billion in a lower price for gas. Of course, this means it also COST the OIL companies $70 in lost revenue. That is why McCain and especially Coburn will be well compensated by the Oil industry for their services if they are able to kill ethanol (without the down-side risk cushion of the VEETC you will see private investment in Ethanol fuel dry up quite quickly). Note that Coburn recieves $250,000 in contributions from the Oil industry in the last several years (see: Opensecrets.org).