Title VIII of the Senate passed version of H.R. 4 calls for more fuel-ethanol subsidies.[1]

Ethanol is a corn-based additive that serves as a fuel oxygenate.[2] Fuel oxygenates are required in certain areas of the country with excessive carbon monoxide or ozone pollution as mandated by the Clean Air Act.[3]

Ethanol-blended fuels are already highly subsidized by taxpayers. This amendment is nothing but a "new gas tax."

Ethanol is more expensive to produce than gasoline; yet ethanol currently receives a federal subsidy of 53 cents per gallon by means of the 5.3 cent per gallon exemption from the federal excise tax on motor fuels given to manufacturers of gasohol.[4] Gasohol, also known as E10, is a blend of gasoline with no more than 10 percent ethanol. Gasohol constitutes 99.7 percent of the fuel ethanol consumed in the United States.[5]

Mandating the increased use of ethanol-blended gasoline essentially amounts to a "new gas tax" as well as more taxpayer subsidies for the handful of companies currently producing ethanol.[6]

Title VIII of the Senate passed version of H.R. 4 seeks to almost triple the use of ethanol-blended gasoline by 2012.[7]

A Heritage Backgrounder will be published next week, featuring Hymel's detailed analysis supporting these other findings:

• Even more funds will be diverted from the Highway Trust Fund by the Senate imposed ethanol mandate.
• Proper infrastructure does not exist to transport ethanol-blended fuels nationwide.
• Ethanol is not environmentally friendly.
• The Senate-imposed ethanol mandate amounts to "corporate welfare" for a handful of producers.
• Ethanol producers also enjoy a "Safe Harbor" provision under the Senate-imposed ethanol mandate.
• Mandating fuel ethanol makes no contribution to national energy security.

Endnotes

[1]On August 2, 2001, the House passed H.R. 4 (Securing America's Future Energy Act of 2001), and on April 25, 2002, the Senate incorporated S. 517 (Senate Amendment 2917) into H.R. 4, Title VIII (Energy Policy Act of 2002).