Doesn the Ethanol Subsidy Actually Benefit Oil Companies?
Here’s Vinod Khosla from a story in Wired, Six Ethanol Myths: Yes, ethanol producers and blenders share in a 51-cent-a-gallon federal credit that costs taxpayers about $2 billion a year. The majority of that accrues to oil companies, not farmers. Before pondering this too much, consider for a moment just who has lobbied to keep the credit intact. Has it been oil companies? No. Has it been politicians from oil states like Texas and Alaska? No. The groups always arguing in favor of the ethanol tax credit have historically been farm state politicians, ethanol lobbying groups, and corn lobbying groups. Last year I documented the reaction of Brian Jennings, the executive vice president of the American Coalition for Ethanol, when ExxonMobil (XOM) CEO Rex Tillerson called for an end to the subsidies. Jennings said “it is outrageous for an executive for big oil to actually suggest getting rid of the tax credit for ethanol.” That’s very odd behavior if Big Oil is actually the beneficiary. But o
