Ethanol Big Winner in Energy Bill

John Davis

The Energy Bill has cleared the U.S. Senate, and the ethanol industry looks like it will benefit the most from the package.

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If any industry clearly comes out ahead, it’s the ethanol business, analysts say. The Senate bill massively boosts the mandate for ethanol use from 7.5 billion gallons in 2012 to 36 billion gallons by 2022.

The Senate easily brushed aside concerns raised in some quarters that ethanol- related demand for corn could translate into higher food prices for consumers and higher feed prices for livestock producers. Proposals to rescind a tariff on ethanol imports and to reduce the ethanol production mandate if the Agriculture Department determined there was a corn shortage were both turned back during debate.

The ethanol mandate is “the part of the bill that has the broadest consensus to it. It’s a good initiative for the ethanol industry. It’s a nice growth driver … and I think one way or the other the Congress will help facilitate the growth of that industry before the next election,” said Mark McMinimy, an agribusiness analyst at Stanford Group Co.

However, an amendment designed to shell out more than $32 billion in tax incentives on the next decade to alternative energy producers was stopped, at least for now, when Republicans blocked a procedural vote to limit debate. They charge the incentives paid for by rescinding tax breaks and boosting other revenues collected from big oil and gas firms would have just been passed along to consumers. Democrats pointed to record oil industry profits as proof the oil companies didn’t need the taxpayer-funded subsidies.

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