Ethanol Industry Will Still Be Vibrant Without Tax Credits
Todd Becker, CEO of Omaha-based ethanol producer Green Plains, says ethanol “is still a great fuel” according to an article in the Omaha World-Herald.
Ethanol allows for a reduction in demand for foreign oil and is a cleaner burning fuel. At current production rates, ethanol provides more motor fuel for the United States than it imports from Saudia Arabia, the equivalent of about 1 million barrels a day.
Also, the ethanol industry is more mature than when the tax credit subsidy was originally placed into service and ethanol now actually costs about 30 cents cheaper than gas. This difference would be reduce by eliminating the 45 cent per gallon credit, but it would not have a dramatic effect on the industry.
This is especially true due to the mandate to blend 12.6 billion gallons of ethanol into gasoline this year. As long as that mandate remains, ethanol should remain a vibrant industry and the Obama industry stands behind it so far.
The states of Iowa and Nebraska rank #1 and 2 in ethanol production with 42 and 25 plants in those states, respectively, with thousands of jobs tied to the production, transportation and marketing of the fuel.
The ethanol industry would like to see the elimination of the tax credit (since it really goes to the oil industry, not the ethanol industry) and have the savings put into infrastructure to deliver an 85/15 blend to consumers.
Major changes to the tax structure of the ethanol industry will most likely happen this year. It will be interesting to see what the final change will be.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
We can get by without subsidies as long as it’s still a crime to not buy our stuff…
Paul Neiffer explains why the ethanol industry can get by if the subsidies go away: Also, the ethanol industry is……