NCPA - National Center for Policy Analysis

Ethanol Is A Campaign Crop, Say Critics

January 21, 2000

"Sometimes I think they just come out to pander to us," says Iowa farmer Marvin Flier, talking about all the presidential candidates who troop to Iowa and rave about corn alcohol, called ethanol.

Ethanol, introduced after the 1973-74 oil crisis, is hailed by supporters as a way to avoid dependence on foreign oil and as a clean-burning fuel. But many experts have been unimpressed, say observers, and view it as another corporate subsidy.

  • A 1997 General Accounting Office study concluded that tax breaks for ethanol had cost the U.S. Treasury $7.1 billion, while having "little effect" on the environment or on American energy independence.
  • Ethanol-blended gasoline is taxed 5.4 cents less than per gallon than pure gasoline, and most experts agree the ethanol industry would disappear without that advantage.
  • "Ethanol helps with some air pollution problems and worsens others," says A. Blakeman Early of the American Lung Association; ethanol evaporates more easily than gasoline and in hot summer months creates ozone, or smog.
  • "This is a classic case of a corporate welfare-style giveaway," says Scott Harshbarger, president of Common Cause; indeed, almost half of the capacity to produce ethanol is owned by Archer Daniels Midland, a huge agricultural conglomerate -- and a big campaign contributor.

By some calculations, without ethanol, the price of corn, which is about $1.40 a bushel, would be 20 percent lower than it is.

Source: Nicholas D. Kristof, "Ethanol, for All Its Critics, Plays Big in Iowa," New York Times, January 21, 2000.


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