In a previous post I wrote about how Congress voted not to keep the ethanol subsidies going. A program that needed assistance when it first started, but now has grown enough to support itself without the taxpayer’s money. Six billion dollars was given to the ethanol industry each year. Congress decided to allow the subsidy to expire to help cut the budget. A plan that when you really look at it, was another political ploy to help the politicians look like their doing their job and following what the American taxpayer wants.
In 2007 President G.W. Bush signed into law a bill that would require oil company refineries to add ethanol into fuel in the United States. So ending the subsidies will not harm the industry when it comes to losing business and causing the ethanol industry to go out of business. In the end, the government has still help pick a winner within the energy industry.
What does that mean for other commodities within the US? Nothing. Corn prices will continue to be within the same range as it has been, as well as other commodities like beef and poultry. Ethanol consumes approximately 25% of the corn grown in the United States. On top of it all, it doesn’t even produce the energy it consumes to create it.
So why is it still being used within the US? I really can’t answer that since I don’t know what is going on behind closed doors in Washington.