impacts of extending ethanol tax credit

just a quick post today, from FAPRI and potential impacts of extending the ethanol blender’s credit:

http://www.agrimarketing.com/ss.php?id=68115

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One Response to impacts of extending ethanol tax credit

  1. stopethanol says:

    Couple of serious problems with that report.

    “With incentives in place, they saw fuel production from corn go up 1.2 billion gallons a year …”
    The rise in “fuel” production had absolutely nothing to do with the tax credit. Ethanol production will rise by more than a billion gallons per year until 2022. It is cast in stone in the federal RFS mandate in EISA 2007. Makes no difference whether there is a tax credit or not. The gasoline producers have to blend more and more ethanol every year, they have no choice.

    “When you give fuel blenders a tax credit, they keep part of the benefit and charge service stations less for blended fuels. In turn, service stations should charge consumers less for blended fuel at the pump.

    Baloney. When ethanol is mandated and the gasoline producers have no choice they must install tanks to hold ethanol and install expensive blending equipment at each terminal because ethanol blended gasoline cannot be shipped by pipeline. Blending is done at the terminals and there are thousands of them in the country. Each terminal spends an estimated $1+ million to upgrade infrastructure to blend ethanol. The blenders credit was never passed along in lower gasoline prices at the pump because it was eaten up at the terminal. Here in Oregon, a mandatory E10 state, our E10 has always been more expensive than ethanol free gasoline in the surrounding states.

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