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Farm interests strain facts to defend ethanol

Bob Tippee
Editor

Farm interests will say anything to protect the magic money machine that the US government has built for them with fuel ethanol.

They're hard at it now, as global leaders awaken to the push biofuels give the price of food.

In testimony May 1 to the Joint Economic Committee of Congress, National Farmers Union Pres. Tom Buis acknowledged that the US ethanol mandate contributes to the food-price surge but argued that other factors are more influential. He listed $120/bbl oil, the declining value of the US dollar, increased demand from developing countries, and global production shortages, especially for wheat, associated with weather.

So far, so good. No one says government support for ethanol and other biofuels is the only reason food prices are high. And there's room for honest disagreement about the relative strengths of forces driving up prices.

But the biofuels push is a deliberate act of government. Hoping to prevent a correction of that mistake, Buis stretched his argument into a realm that should alarm oil and gas companies.

"While critics will say our government is subsidizing and mandating the use of ethanol," he said, "the subsidies pale in comparison to the amount we spend subsidizing the oil companies and protecting the shipping lanes to import oil from the most unstable region of the world."

Oh?

The US will protect shipping lanes no matter how much oil it imports, so that point means nothing.

And the bluster about subsidies is false. Last year, according to the Energy Information Administration, subsidies for oil and gas totaled $2.149 billion, of which $260 million represented tax breaks for clean-fuel vehicles, not oil and gas companies.

The blenders' tax credit alone on the 6.5 billion gal of ethanol blended to gasoline last year was worth $2.92 billion. And ethanol gets other subsidies.

"Instead of cutting the ethanol mandate, maybe Congress should cut the big oil and gas subsidies," Buis said.

Coming from a leader of an industry that enjoys subsidies estimated by the Heritage Foundation at $25 billion/year and favors that raise food prices by a further $12 billion/year, this is hypocrisy.

(Online May 2, 2008; author's e-mail: bobt@ogjonline.com)


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