Myth No. 6: Ethanol Gets More Subsidies than Oil

When I wrote “5 Ethanol Myths Exposed – as Crap!” a few days ago, I knew that it would upset some people (cognitive dissonance, and all that), but I was more surprised by the number of people leaving comments like this one, below, left by Steve Shurts.

Your article (re. Argonne’s study) ignored the real criticism I have of ethanol – cost. The Feds subsidize production of ethanol based fuels to the tune of a $1.00/gallon of ethanol. If the consumer were paying this cost, the cost of E-fuels would be higher than strictly petroleum-based fuels. As these subsidies go away, we will find out how desirable it is to run fuels which cost more than gasoline and have the potential to damage some older engines.

Steve is a regular commenter on energy/oil posts (one of the most entertaining, in fact), and he’s not alone.  Several regular readers pointed out that ethanol subsidies helped lower the price of ethanol-based fuels, and concluded that, without those subsidies, ethanol would be too expensive to compete with gasoline.  That conclusion (of course) is crap!

Luckily for me, I won’t have to do any of the compiling of facts, figures, and awesome graphs (like the one above), because Cleantechnica editor Zach Shahan’s already done all the heavy lifting in a series of articles he wrote comparing various energy subsidies.

Zach writes that “oil got more money in tax breaks in 2011 alone ($4 billion) than the wind industry had received in total up to 2007 ($3.75 billion), and it is expected to get $77 billion more by 2021.”  Zach goes on (in page 3 of his article) to expose more oil subsidies, which I’ve shared, verbatim, below.

Daniel J. Weiss and Valeri Vasquez had an excellent piece recently on the “facts of Big Oil’s tax loopholes and windfall profits.” The whole piece is worth a read and shows why, despite broad public support (including Republican voter support) for ending oil and gas company subsidies, the companies continue to receive billions from US taxpayers (hint: institutionalized political bribery). However, I’m just going to pick out the bit on Big Oil tax breaks (which were kept in place this year primarily by Republicans in Congress):

  • $4 billion: Cost of Big Oil tax breaks in 2011.
  • $2 billion: Cost of Big Oil tax breaks eliminated by S. 940.
  • $77 billion: Cost of Big Oil tax breaks from 2011 to 2021.

Big Oil has raked in billion in tax breaks for decades, but I am not sure of any specific total.

Keep in mind, also, that Zach doesn’t count the costs of keeping US troops in the oil-rich Persian Gulf region, which would push the “indirect subsidy” number for oil well past the TRILLION dollar mark.

So, by all means reduce or remove government subsidies on ethanol – but do the same for oil, and (while you’re at it) bring the troops home.

SourcesCleantechnica, Cost of War.

Jo Borrás

I've been in the auto industry 1997, and write for a number of blogs in the IM network. You can also find me on Twitter, at my Volvo fansite, out on two wheels, or chasing my kids around Oak Park, IL.