One of the likely losers in an ambitious deficit reduction program under negotiation in Washington, D.C. is the federal subsidy for ethanol fuels.
We dont need the excise tax credit as an incentive for refiners to blend (ethanol into gasoline) any more than we need an incentive to drill for $100 a barrel oil, Chuck Woodside, chairman of the national Renewable Fuels Association, told KearneyHub.com.
I think that's great place to start a drive toward a balanced federal budget.
US subsidies to prop up corn ethanol production were $5.68 billion in 2010, according to the White House Office of Management and Budget. Production in the USA hit 13 billion gallons last year, up from 50 million gallons in 1979. It's been well documented and reported that there is very little, if any, carbon footprint savings as a result of using corn ethanol as a fuel instead of hydrocarbons.
And there's a lot to report on the negative side of the ledger besides bleeding taxpayers.
A report from the Farm Foundation titled "What's Driving Food Prices in 2011?" blames government ethanol usage mandates as a primary driver behind soaring corn prices. More than one-fourth of the 2010-11 corn crop was required to meet ethanol demand, up from 10 percent of the 2005-2006 crop.
According to data from the US Department of Agriculture, corn prices in Illinois are running at about $7.17 per bushel in July. That's up about 70 percent since late 2009. Higher corn prices also push up prices for livestock that feeds on corn. According to the Farm Foundation, the farm animal industries had large financial losses in 2008 and 2009, partially as a result of high feed prices that could not be passed on to consumers. Livestock herds were liquidated, driving up prices for beef and other types of meat.
Environmentalists report that the fertilizers used on the 32 million acres in the USA used to grow corn for ethanol contribute to a marine dead zone in the Gulf of Mexico where effluent drains from the Mississippi River. It's described as one of the largest marine dead zones in the world, and fertilizers are the primary cause.
A technical review of biofuel options, including waste biomass as a feedstock, in the current issue of the Scientific American does not offer any good news. In an article headlined "The False Promise of Biofuels," David Biello writes: "Despite extensive research, biofuels are still not commercially competitive. The breakthroughs needed, revealed by recent science, may be tougher to realize than previously thought." He is even skeptical about the potential of work being done by biogenetics luminaries such as J. Craig Ventor to create synthetic microorganisms to produce oil.
This one should be a no-brainer in the deficit reduction talks.