Sunday, January 1, 2012

The End of Three Decades of US Tariffs on Imported Ethanol

I'm shocked at how little press coverage the expiration of the ethanol subsidy and tariff has gotten. As Iran and the US trade threats over blocking oil transport from the gulf, congress has allowed the tax credit for ethanol blenders to expire, along with a tariff that effectively kept out more efficiently produced foreign ethanol. The blenders’ subsidy extended a 45-cent subsidy per gallon of ethanol blended into gasoline. The tariff ended a 54-cent-per-gallon tax on imported ethanol, mainly from Brazil —which makes the stuff much more efficiently and environmentally friendly from sugar cane. Still in force is a federal mandate that requires a minimum amount of ethanol be used each year.

Source: PR Newswire - sacbee.com

For the first time in more than three decades of generous US government subsidies for the domestic ethanol industry, coupled with a steep tariff on imports, the United States market will be open to imported ethanol as of January 1st, 2012, without protectionist measures.

The adjournment of the 112th Congress means both the US$0,54 per gallon tax on imported ethanol and a corresponding tax credit of US$0,45 per gallon for blenders, the VEETC (Volumetric Ethanol Excise Tax Credit), will expire as expected on December 31st. "With Congress in recess, there are no opportunities for further attempts to prolong the tax credit or the tariff, so we can confidently say these support mechanisms will be gone at the end of 2011," said the Washington Representative for the Brazilian Sugarcane Industry Association (UNICA), Leticia Phillips.

This is a Suspicious News Brief. Read more at PR Newswire - sacbee.com

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