Ethanol is produced from some agricultural products. It is a form of alcohol which is added to regular gasoline in order to make us less reliant on foreign supplies of oil, from which gasoline is derived.
The subsidy to create ethanol was first provided 30 years ago and ended December 31, 2011 when Congress decided not to renew it. The federal subsidy paid over the last 30 years to growers of corn was $20 billion. Providing that subsidy for corn meant that farmers devoted their corn crop for ethanol use, driving up the price for corn used for food, including animal feed. That in turn hugely drove up the cost of meat coming primarily from cows. My recollection of discussions concerning ethanol derived from corn is that it was the least efficient way to manufacture ethanol and that using certain grasses (not part of the food chain) provided more ethanol using less energy and the fuel (oil) required to produce that energy.
For whatever reasons, Congress was able to resist the pressures of the farm lobby to extend the ethanol subsidy. Now it’s time for Congress to stand up and show the same intelligence and courage and end subsidies for a host of industries. The most profitable companies in America are the oil companies, and every so often we read about major oil companies not paying any federal income taxes or paying vastly reduced taxes because of loopholes built into the tax code by Congress.
Over the years, the oil corporations, Wall Street securities firms and the banks, and the prescription drug manufacturing firms have made billions of dollars in campaign contributions to members of Congress, while also keeping an array of lobbyists on their payrolls. Also, we have had members of Congress who, instead of representing the public interest, used their public office to get special deals and tax avoidance schemes for these industries. After leaving Congress, they often go to work for those very industries they helped avoid paying federal taxes and for which they obtained enormous subsidies, adding to our national deficit year after year.
The US, aggregating the expenditures for oil by both the public and private sectors, spends and sends to oil producing countries abroad over $500 billion a year. If we required all 18-wheel trucks in the US produced here in the US to use diesel oil or, even better, natural gas (available in huge quantities in the US), I have read that we could reduce our purchases of oil from OPEC nations by half. We could save even more, that is cut oil imports, by requiring existing 18-wheelers to convert to diesel or natural gas. Why not provide federal loans to truckers at low interest rates to do the conversions?
What has been needed for a long time -- and is needed now more than ever -- is the appointment of a US czar with jurisdiction over all of our energy resources. Such a czar should have the power given to the head of the Manhattan Project which developed the nuclear bomb during World War II, harnessing the assets of our country, intellectual and material. The cost of the Manhattan Project was $2 billion, adjusted for inflation would be $21 billion today. What a bargain, if we could hugely increase our energy resources here in the US, including the use of natural gas fields newly discovered which are estimated to provide the US with energy resources greater than the oil reserves of Saudi Arabia.
The President should lead the fight doing what he can immediately by executive order and rallying the Congress to do what is required of them. If they won’t willingly work together with him on this issue, then he should make it the priority campaign issue in the 2012 election.