Senate votes to end ethanol subsidies...

Jad G

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and end increased tariffs on imported ethanol as well. Who believes this will cause a sharp spike in the cost of e85? Does this mean the fuel will become more scarce of phased out? All the news articles tried to push the point that the fuel is wasteful and inefficient and a waste of a resource that could be used for food, though Valero just said all their new stations will have ethanol so I am curious what effect this legislation will have. Any input?

Clicky aqui
 

8liter

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I believe this guy is on the right track.......

Yeah, Ha-ha real smart.


Cut the exise tax credit which cost $6 billion. But the additional economic activity from producing ethanol in the U.S. generates about $8 billion in additional tax revenues for the Federal Government. Unless my arithmetic is wrong that means the Government was ahead $2 billion.


It will be 'interesting' to see what happens when all the speculators drop their long positions in oil this Fall and the price of oil drops about 20% to 30%. Then, oil companies, without the Excise Tax Credit, will demand prices so low that ethanol producers revenues will drop to the point they won't be able to meet the payments on the debt they incurred to build all that production capacity (three fourths of the production capacity in the ethanol industry is less than 10 years old - meaning they have large debt and large interest payments to meet.) You don't have to miss ALL your interest payments to make creditors angry enough to force you into bankruptcy. Creditors want to get paid for the money they loaned you. They are creditors, not investors.


So when the Ethanol producers go into bankruptcy, guess who will buy them up...the oil companies. The oil companies are interested in making just enough ethanol to replace the MTBE they can't use anymore. They certainly aren't going to make enough Ethanol to meet 10% of our personal transportation fuel demands (as ethannol does now). That would only drive down the price the oil companies can charge for gas at least 15% (Francisco Blanch, Chief Commodities Strategist, Merrill Lynch - Wall Street Journal, April, 2008).


Last year, in holding down the price of gas 15%, ethanol saved us all about $70 Billion in gasoline costs. But the oil companies didn't like giving up all that money (oil companies managements are never satisfied with how much money they are making. They always want MORE). So you can say good-bye to those savings in the future. Oh, a mandate you say? Any enforcement provisions for said 'mandate'? ...oh, I see, a 'gentleman's mandate' then. You didn't think the Government can use a mandate to cause a company to lose money did you?..DID YOU??


In 2010 ethanol reduced the amount of foreign oil we imported about 360 million barrels which kept $28 Billion from being sent out of the country. By the way by supplying almost 10% of the fuel supply ethanol increased our energy security. I don't know how to evaluate that in terms of dollars. But energy security is not something the oil industry gives a damn about. Not when profits are in play.
 

Satyr

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^While I agree with a lot of what the author said, it is important to note that the largest U.S. ethanol producer was involved in a very large price fixing faux pas. It is not only oil companies that are greedy.

Either way, it is ridiculous that the subsidies that get cut are the ones actually providing some worth. I guess that's what he get for having a democratic senate.

Also, regarding tariffs...sure, it will lower the price on imported ethanol, but we imported less than 0.1% of our overall ethanol demand in 2010. So the tariff reduction does nothing for us.
 

oldmodman

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I just wish that a rider would be attached allowing all citizens to brew as much alky as we can. No strings, no fees, no road tax allowed.
 

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