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).
[2] Brent D. Yacobucci and Jasper Womach, "Fuel Ethanol: Background and Public Policy Issues," CRS Report for Congress Order Code RL30369, Congressional Research Service, summary, February 21, 2002.
[3] Ibid.
[4] Ibid, p. 9.
[5] Ibid, pp. 1-2.
[6] Senator Hillary Clinton (D-NY), Senate Congressional Record, p. S2570, April 11, 2002.
[7] Mark Holt and Carol Glover, "Omnibus Energy Legislation: H.R. 4 Side-by-side Comparison," CRS Report for Congress Order Code RL31427, Congressional Research Service, p. 7, June 7, 2002.