STAR LEDGER EDITORIAL: End the ethanol subsidy
Published: Thursday, June 16, 2011, 6:00 AM
By Star-Ledger Editorial Board
In the annals of corporate welfare, subsidies for corn ethanol stand apart. For 40 years, the federal government has subsidized ethanol production, protected it from foreign competition and required its use. Sen. Dianne Feinstein (D-Calif.) called it the “triple crown of government intervention.”
The subsidy alone, a 45-cent tax credit to ethanol blenders for every gallon of ethanol they use, costs taxpayers about $5.5 billion a year. Those ethanol blenders? Mostly big oil companies.
Feinstein and Sen. Tom Coburn (R-Okla.) have introduced a bipartisan bill that would shut down the program July 1. Coburn tripped up this week by trying to make an end-run around Senate procedures by slapping an end-the-subsidy amendment onto another bill; it promptly failed. That shouldn’t obscure the fact that killing the subsidy is long overdue. Sens. Frank Lautenberg and Robert Menendez (both D-N.J.), mostly silent on the topic, should get behind the Feinstein-Coburn effort. The nation’s trillion-dollar deficit requires no less.
The idea behind supporting corn ethanol was noble: energy independence, saving the environment and helping corn growers benefit from their surplus crop. But corn ethanol has only two-thirds the energy content of regular gasoline, so you need more fuel in your tank to go farther with the ethanol blend. Hardly a recipe for kicking the fossil-fuel habit. And it’s not as green as you would expect. Creating corn ethanol requires a high use of fossil fuels to grow, cultivate and move.
U.S. production of corn ethanol is so plentiful, companies are now exporting their excess to Brazil. A study this year — by Iowa State University, of all places — found that ethanol production, booming over the past five years, would have expanded rapidly without the subsidy.
It’s not surprising that some farm state senators are trying to salvage the subsidy, with their own bipartisan bill that ties a reduced subsidy to oil prices. It’s too late for halfway measures.
New Jersey Rep. Leonard Lance (R-7th Dist.), who introduced an end-the-subsidy bill in the House, said the attempt to come up with a half-measure is a good sign of “a new dynamic.” “I feel momentum on this issue,” he said. Let’s hope he’s right.