Ethanol industry leaders responded to a proposed repeal of the Renewable Alcohol Tax Credit, calling it a shortsighted and ill-informed measure that would increase gasoline prices.
A bill introduced in the U.S. Senate this week by Sen. Tom Coburn (R-Okla.) and Sen. Ben Cardin (D-Md.) would raise motor fuel taxes on nearly all gasoline sold in the U.S. Currently, ethanol blended gasoline is taxed at a rate of 13.6 cents per gallon, with non-ethanol blended gasoline taxed at 18.1 cents. Blenders of the fuel, often oil companies, get the difference in a refund and often pass on those savings at the pump.
"At a time when gasoline prices are nearing the $4 per gallon mark, ethanol is the only alternative liquid fuel in widespread use today. This bill would increase the cost of all ethanol blended fuels," says Clean Fuels Development Coalition Executive Director Douglas A. Durante. Ethanol is blended with much of the gasoline sold in the U.S. and comprises nearly ten percent of the gasoline pool.
Todd Sneller, administrator of the Nebraska Ethanol Board, urged lawmakers to recognize that ethanol production increases the domestic fuel supply, cutting the price of gasoline by 15 to 50 cents per gallon.
Sen. James Webb (D-Va.) and California Senator Dianne Feinstein (D-Calif.) also signed on to the bill. According to recent price reports, ethanol in high level blends like E85 used in Flexible Fuel Vehicles is selling as much as 80 cents below gasoline. "California has one of the most progressive E85 programs in the nation and this legislation would wipe that out. Virginia just recently opened a major ethanol production facility that would be impacted by such a measure," says Durante.
CFDC members criticized senators who supported the tax increase legislation for their characterization of ethanol as a dirty fuel.
