Ethanol is not subsidized by taxpayers

“The only problem I have with ethanol is that it’s subsidized by the government!”

“Why take the people’s tax money and hand it to a few corporate faremers (sic) & refiners?” 

“Let’ look at the damage caused by subsidizing ethanol.”

These are actual reader comments on recent newspaper stories that focus on ethanol. If the topic of ethanol comes up among friends or family members, odds are at least somebody will bemoan “all those ethanol subsidies that farmers get.”

Here’s the thing: Ethanol isn’t subsidized. Your tax dollars directly support many different industries, but ethanol isn’t one of them.

Critics take misguided shots (deliberate or otherwise) at ethanol from a number of different angles. But there’s a difference between being misguided and flat-out wrong. If you think ethanol is subsidized, you’re flat-out wrong.

Yes, it’s true that various federal and state tax and blending credits — starting with The Energy Tax Act of 1978 — have aided ethanol over the years.  For example, the Minnesota legislature reduced the state fuel tax on gasoline that contains at least 10 percent ethanol by 4 cents per gallon in 1980. That credit diminished over the years and was phased out completely in 1997. A state ethanol producer payment program, which applied to ethanol plants, not farmers, ended in 2012.

December 31, 2011 marked the end of the federal ethanol blending credit, and, thus, the end to what many considered ethanol “subsidies.” It’s also important to point out that blending credits did not go to farmers. Checks weren’t being cut to farmers simply for growing corn that was made into ethanol. Energy producers (i.e. oil companies and refiners) received the credits as an incentive to blend more cleaner-burning ethanol and reduce the negative impact vehicle emissions had on air quality.

The next time you’re in the same room with someone who starts pounding his or her first on the table and shouting about “those damn farmers and their ethanol subsidies,” execute the following plan:

1. Explain to the angry person the facts about ethanol “subsidies,” as outlined in this post.

2. In all likelihood, the angry person probably will reject the facts because it doesn’t fit his or her predetermined set of beliefs. Once populist rhetoric or easy-to-digest talking points become entrenched in a person’s head, it’s tough to get them out.

3. Direct the anger somewhere more appropriate. If the person is mad about ethanol “subsidies” and refuses to believe that ethanol “subsidies” don’t exist, try to focus their anger on actual subsidies that are alive and well.

4. For starters, you can tell them about the $7 billion per year that oil companies enjoy in public subsidies. Get them fired up about using taxpayer dollars to build sports stadiums for billionaire owners. There are all kinds of actual subsidies to be angry about. Getting all fired up about ethanol subsidies that don’t exist is a tremendous waste of energy.

5. Ask the angry person if he or she would rather get their fuel from an American corn field, or heavily subsidized oil companies that drill in the Middle East or the Alberta Tar Sands?

(You might be wondering what you should do when commenters on articles about ethanol on newspaper websites get the facts wrong. Proceed with caution. Newspaper website comments sections are scary places where facts and reason go to die.)

As the debate about ethanol and the Renewable Fuel Standard (legislation that sets goals for the amount of ethanol we blend in gasoline) heats up, critics of renewable fuels are out in full force. Many of them are still clinging to the blatantly wrong argument that ethanol is directly subsidized by taxpayers. The Environmental Protection Agency’s proposal to reduce the amount of ethanol blended in gasoline by 1.4 billion gallons in 2014 has serious ramifications for farmers, the rural economy and our environment. It is absolutely essential that farmers and renewable fuels supporters push back on myths created by the opposition during this debate.

Ethanol is not “subsidized.” That’s one myth that is easily discredited.

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