John, IMO Brazil's ethanol imports will help keep the system in check. I also think there is growing political sentiment to end the ethanol tariff .
Ethanol tariff may be lifted for Bush goal
January 26, 2007
From combined dispatches
The U.S. tariff on ethanol imports probably would be lifted to meet President Bush's goal of increasing the use of renewable fuels, Energy Secretary Samuel W. Bodman said yesterday.
We are "probably going to need to remove the tariff so we can import more," Mr. Bodman said at a roundtable discussion at the World Economic Forum in Davos, Switzerland.
Mr. Bush, in his State of the Union address Tuesday, said the United States should expand the mandate for alternative fuels such as ethanol to 7.5 billion gallons by 2012 and 35 billion gallons by 2017 to reduce gasoline consumption by 20 percent. The U.S. imposes a 54-cent-a-gallon tariff on ethanol imported from countries outside the Caribbean and Central America.
The U.S. ethanol industry would have trouble producing more than 14 billion gallons within the next five to eight years, said Todd Alexander, a partner with Chadbourne & Parke in New York that has helped develop and finance ethanol plants.
"And even that would be difficult to achieve," he said.
Indeed, 35 billion gallons of ethanol would require more corn than the nation's 11.1 billion bushel yield last year, the environmental group Friends of the Earth noted.
Lifting tariffs may generate opposition from lawmakers in states that rely on them to make their ethanol competitive with fuel from countries like Brazil.
"It will happen over Chuck Grassley's dead body in the near term," said James Lucier, a senior political analyst at Prudential Equity Group. "Grassley believes that ethanol is still a nascent industry that needs to be protected from foreign competition."
Mr. Grassley, Iowa Republican, has maintained support in a state that is trending Democratic "because of his intimate association with the Iowa farm industry," Mr. Lucier said.
In May, Mr. Bush said he wanted to work with Congress to drop the ethanol tariff to address supply concerns and reduce gasoline prices. Ethanol became the primary additive in reformulated gasoline in the spring, a process that resulted in spot shortages and surging pump prices.
The U.S. "must go beyond corn" to increase ethanol supplies, Mr. Bodman said. Corn could produce only 12 billion to 15 billion gallons of fuel a year, so the nation must develop ways to derive ethanol from plant waste.
washingtontimes.com
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Snip>The federal government spent over $20 billion on farm subsidies last year: much less than the European Union lavishes on its mollycoddled farmers, but more than Washington spent on foreign aid and almost twice what it spends on subsidising college for poor children. And America's farm subsidies, unlike Europe's, have become more, rather than less, trade-distorting. Most of the direct cash is lavished on crops, particularly corn (maize), soyabeans, rice, cotton and wheat, often depressing world prices. Farmers who grow these crops got 93% of the subsidies between 2002 and 2005 (see chart). As a result, six out ten American farmers get no federal money, while 10% of farmers get 72% of it. Nor are these small, struggling family farmers. Over half the subsidies go to large commercial farms.
economist.com |
