Florida politician calls for lifting tariff on imported ethanol.

U.S. Representative Ginny Brown-Waite (a Florida Republican) has introduced legislation to eliminate the fifty-four cent per gallon tariff on imported ethanol.

She joins a growing bipartisan group of politicians who advocate opening the US market to biofuels. The first big name politician to call for lifting the tariff was former Florida Governor Jeb Bush, back in 2006.
Brown-Waite's bill was introduced on June 4 and has been referred to the Committee on Ways and Means which governs tariff issues. It is likely to run into stiff oppositon from farm states where corn-based ethanol receives hefty government subsidies, including a 51 cents per gallon blenders credit.

I have heard many arguments made both for and against the tariff in the past. (By the way the tariff was due to run out at the end of this year but Congress just extended it another 12 months as part of the Farm Bill).

The two main arguments against lifting the tariff are 1./ US tax payers would end up paying to subsidize a foreign product and 2./ the US domestic ethanol industry needs to be protected from cheaper imports in order to ensure that investors keep pumping their money into its growth until it can stand on its own feet. Otherwise, the US will move from dependence on foreign oil to dependence on foreign biofuels.

On the other hand, those who argue in favor of lifting the tariff say we are better off giving our money to allies like Brazil, than places like Venezuela where oil revenue fuels the anti-American agenda of Hugo Chavez.

Brown-Waite says she has the consumer uppermost in her mind. Though she also blames the Democrats for not opening up Alaska for oil exploration and drilling (I wonder if she feels the same way about drilling in the Gulf of Mexico?)

“At a time of rising prices in almost every sector of our economy, Congress should take measures to increase the supply of gasoline and lower prices,” she said.  “Unfortunately the Majority has done nothing to increase supplies through increased exploration or drilling, so I introduced this bill to do something to help my constituents."

She says her bill would "increase ethanol shipments to the United States virtually overnight, letting Midwestern farmers use more of their corn stock for cattle feed as well as human consumption. This would in short order lower food prices, fuel costs, and help stabilize world markets."

I'm sorry to disappoint the Congresswoman, but she is seriously misinformed on this last point. Lifting the tariff would have little immediate impact on ethanol imports, according to analysts. Yes, more Brazilian ethanol would flow into the US market. But Brazil is already stretched to meet its domestic commitments and has little to spare. In the mid to long term, it could have a greater impact by helping establish ethanol as a global commodity.

Click here for more information about Brown-Waite's bill.

- David Adams

Comments

[Chris]

"Ethanol was used as lamp fuel in the United States as early as 1840, but a tax levied on industrial alcohol during the Civil War made this use uneconomical. This tax was repealed in 1906, and from 1908 onward Ford Model T automobiles could be adapted to run on ethanol. With the advent of Prohibition in 1920 though, sellers of ethanol fuel were accused of being allied with moonshiners, and ethanol fuel again fell into disuse until late in the 20th century." -Wikipedia

Now 100 years later, this is the answer to our dependancy on oil? The biggest insult to Americans at large being, our tax paid, elected representatives are now looking to give 'big oil' yet another $0.10 profit margin. Its good to see last years tax increases being put to good use. Thanks for keeping Floridurrr afloat and not wasting our money on education!
See you at the PUMP. . .

[Anthony]

Can you tell me the Main reason of lifting tariff on imported oil.

[David Adams (Fueling Station)]

Anthony, the main reason I hear is a more modest version of what Brown-Waite is driving at. Yes, it will provide some relief to gas prices by helping reduce demand for oil. It also means that money spent on gas does not all end up in the hands of oil producing countries, some of which (not all, e.g. Canada, Mexico) are not friendly to the US.
Ethanol is also a fuel that could help smaller developing countries, especially in tropical regions) that have no oil of their own and end up paying huge amounts of hard currency on imports. For example, it could help the economies of Central America and the Caribbean where ethanol crops could be grown to supply the US market.
Ethanol is a cleaner burning fuel than gas as it produces less CO2 emissions (unless it is made form corn and then the comparison is less favorable due to energy required for crop preparation and harvesting.)

[Asjylyn (The Fueling Station)]

Hi David. Well, we hoped the blog would stimulate debate. In this case, I get to debate my own colleague a little. It's unclear if ethanol is cleaner. A study plublished last year by Mark Jacobson of Stanford University concluded that ethanol would increase ozone pollution and "may be a greater overall public health risk than gasoline." Some recent studies reached the conclusion that ethanol would lead to an increase in carbon dioxide, not the other way around. While there's a great deal of debate and study on both sides, it is by no means clear that "Ethanol is a cleaner burning fuel." You can read more about it here: http://www.sptimes.com/2008/03/02/Business/Are_Florida_ethanol_p.shtml

[David (The Fueling Station)]

Happy to debate this! It's an important issue to understand as we produce more and more ethanol. My understanding is that ethanol burns cleaner out of the tailpipe. But the full life cycle of the production process, what they call 'well-to-wheel', does not stack up so well when it's corn based. Corn uses a lot of pesticides and requires more gas consumption by farm machinery. That's why the shift to second-generation cellulosic ethanol is so crucial.