U.S. benefits more from ethanol subsidies

There is a growing misunderstanding about government support when you compare corn ethanol and oil. Looking at state and federal tax and other incentives available exclusively to the oil industry, an analysis from DTN (which covers agriculture) shows $17.9 billion annually. The comparable figure for ethanol is $7.1 billion. This does not include tax credits and other incentives that both industries share.

But oil also benefits from a variety of indirect taxpayer supports, including U.S. military spending to protect the Persian Gulf. Mark Delucchi, a research scientist at University of California-Davis, found that oil's share of that protection ranges between $6.9 billion and $29.8 billion. Using a generous definition of public financial support, including tax breaks on equipment depreciation and foreign investments, oil's total benefit from the public treasury can be as much as 10 times that of ethanol.

Oil industry federal subsidies total $133.2 billion to $280.8 billion annually, or $0.96 to $2.01 per gallon for the 139.5 billion gallons produced in the United States. Ethanol industry federal subsidies total $16.1 billion or $1.24 per gallon for the 12.95 billon gallons produced.

Plus, the production and use of 10.6 billion gallons of ethanol in 2009 displaced 364 million barrels of oil at a savings of $21.3 billion - or not having to import any oil for 33 days.

By displacing hundreds of millions of barrels of imported oil, the increasing use of domestically produced ethanol frees up billions of dollars for investing in domestic energy technologies.

Lawrence Yanda

Anamosa