(Posted Wed. Nov 30th, 2011)
By Garry Niemeyer
Back in August, the Green Scissors Project identified ways the federal government could shave $380 billion from the federal budget over five years. But their $380 billion in proposed cuts included a major error that accounts for more that 10 percent of their suggested cuts — $38.8 billion that they argued the Volumetric Ethanol Excise Tax Credit would otherwise cost between 2012 and 2016. They conveniently ignored the important fact that there will be no VEETC between those years. VEETC expires about a month from now, and corn growers and the ethanol industry have long agreed to let it expire and have since stopped fighting for its renewal.
Regardless, we are quite amused that ethanol opponents continue to attack VEETC, even though no one on our side is fighting for its renewal. We stressed this point as long ago as last September.
On Thanksgiving, it was the Washington Times’ turn to take up the cudgel and beat the already-dead tax credit. In an editorial full of grievous factual errors, they claimed yet again that VEETC must go.
It’s kind of like when one football team leaves the field and the other team scores a game-winning victory four plays later. Frankly, we left this game last quarter because there are other, smarter ways to support ethanol, especially in today’s deficit-prone political world. That was part of the reason we and the industry asked for a one-year extension in 2010 – to have time to seek alternatives. We won the game and left the field … not the guys who will pound their chests and claim victory in a few weeks.
But let’s return to the Washington Times editorial and look at where its writers err.
They say: “Powerful agribusiness interests collect a 45-cent-per-gallon tax credit.” In reality, VEETC is a tax credit for ethanol blenders — who are largely oil companies, not ethanol producers. Ethanol producers are not the ones who set the price, so this money does not come back to ethanol producers or the elusive “powerful agribusiness interests.” They call ethanol “an unnecessary and sometimes harmful additive to gasoline.” On the contrary, it is necessary, if you want to wean the country away from foreign oil and toward energy independence, or if you want to reduce greenhouse gas emissions or if you want to support the rural economy. They also carefully omit the fact that ethanol is currently just under 10 percent of the nation’s fuel supply. What would happen to the price of gas or the nation’s economy if fuel manufacturers had to go out and buy 10 percent more oil? And it’s certainly not “harmful,” especially as we move toward more flex-fuel vehicles and the smart and needed Open Fuel Standard. In Brazil, for which the Times has nothing but praise, 80 percent of their cars can run on pure ethanol.
The Times writers say there is “a diversion of a huge amount of the world’s supply of corn into the production of ethanol.” In reality, ethanol production in the United States consumes just about 3 percent of the world grain supply.
They say “Brazil eliminated its ethanol tariff barriers a decade ago.” Actually, Brazil in 2010 imposed a temporary moratorium on its tariff, and that moratorium expires at year’s end. Soon, Brazil will start again imposing a 20 percent tariff on ethanol imports. Also on Brazil, they say “sugar cane is not a food crop; corn is.” And yet, sugar cane takes up acreage that could go into food crops, could it not?
Let the record show that NCGA and our allies in the ethanol industry have left the playing field on this issue long ago and moved on. Those who continue to play are only showing their own foolishness by not realizing that there is no opponent still on the field and the game was called long ago. It’s time to work together on smart energy policies that promote our domestic economy and energy security.