After more than a couple of decades of ethanol subsidies from the federal government, it looks like it’s all coming to an end. Subsidies are a way to help an industry from being unprofitable. Ethanol has been one of those industries that have been getting government support to help it in it’s infancy. The problem is that after all this time, we see that the idea of using ethanol isn’t worth the money of the tax payers.
The issue with subsidies is that it’s only props up the the desired industry to stay a float when it isn’t profitable. The United States have been trying to find a better way to reduce our need for foreign oil for years and giving ethanol a chance seemed like the right idea at the time. We now know so much more about it that we know it isn’t worth subsidizing it. Ethanol hasn’t been the bio fuel we needed to get to the final goal of energy independence. It’s actually has affected the price of corn as well as taking a food source away from the American people.
Finally Congress is moving forward to banning the subsidy support for ethanol. This week a vote was taken on a measure to repeal ethanol subsidies. The Senate voted 73-27 Thursday to end two major subsidies. The first is a $0.45 a gallon tax credit given to oil companies which blend ethanol into gasoline. The other is a $0.54 per gallon tariff on imported ethanol which is aimed at Brazil to help protect our domestic market.
The result will be a savings of about $6 billion dollars per year of the American tax payer’s money. President Obama, of course is not happy with Congress’ decision to take this step. He has made remarks towards vetoing the bill when it comes to him for his signature. The measure passed by a veto-proof margin will still need the Senate to take action since the repeal of the ethanol subsidies was only an amendment. If it clears the Senate, it will need to go to the House of Representative for approval too.
In a year where cutting the spending has never been more important than before, Obama vows to veto the bill. The bill the repeal language is attached to is expected to never make it into law. It’s a slap in the face to the American people as Washington is looking to cut spending, but no one in the Beltway is willing to make the sacrifices needed to get the job done.
This vote comes at a time when global criticism rises over the subsidies for corn-based ethanol. Some blame the industry for the rising food costs. Ethanol may be good for corn farmers, but U.S. livestock farmer argue about the rising cost of feeding which in turn has caused the rise in food prices.
In my opinion, if the idea of ethanol is such a great profitable one, then the industry doesn’t need the subsidies in the first place. I understood in the beginning of the ethanol movement, subsidies were needed to get the ball rolling. After ten plus years of subsidies to any industry is still needed, then maybe it wasn’t such a good idea.
In the case of energy independence, the best way to get there is by America drilling in their own backyard. After all, we have the biggest deposit of natural gas than any other country or continent. Many other countries like China, Russia, and Cuba are now drilling in the Gulf of Mexico, why would we not do the same.