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E85 will be much more expensive than normal fuels without a new tax credit according to the coalition

The tax rebate on ethanol fuels is set to expire at the end of this year. This will vanquish the tax credit that allowed ethanol producers in the U.S. to export as much or more of the fuel to other countries than was used in American fuel tanks. Steven Rattner stated in a piece written for the NYT, “Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.”
 
That exporting of ethanol is one of the reasons the tax break on ethanol is ending.
 
With the deadline looming for the tax credit, a coalition is forming to get federal tax law amended to allow E85 to get a tax cut. The new group will be called the Coalition for E85 and it is specific in that it isn't out to get the tax credit back for E10. The coalition will let that tax expire with no fight from its members, but it wants the E85 blend to gain a new tax cut or the coalition warns the days of E85 might be numbered.
 
The blenders that make E10 fuel that is in wide use, and is a mix of 10% ethanol and 90% unleaded are getting a 4.5-cent-per-gallon tax credit. E85 is getting a credit of 38.25 cents per gallon under the Volumetric Ethanol Excise Tax Credit or VEECT. This is the tax that expires in December.
 
What the coalition is seeking is a change that would allow the E85 blend to receive the Alternative Fuel Credit (AFC). E85 was excluded from the AFC originally to keep it from being able to qualify for both the VEECT and the AFC credits. With the VEETC being discontinued, the makers want E85 to now get the AFC credit to allow the E85 fuel to maintain closer price parity with normal fuels for consumers that drive Flexi Fuel Vehicles. Flexi Fuel Vehicles or FFVs are able to burn regular gasoline and E85.
 
The coalition is trying to raise $75,000 to hire a Washington lobby group to speak on its behalf.

Source: Platts



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RE: Awww poor E85
By Gurthang on 10/18/2011 1:47:54 PM , Rating: 2
While I agree that E10 and E85 should not be getting any tax breaks. That baby is all grown up now and needa to stop living in mom's basement rent free.

My feelings on governments using "incentives" like loans, tax breaks, etc. to draw companies to that country/state/city or grow technologies that are seen as straegicly important for the future are mixed. A well designed and managed program can grow an economy far more than the costs associated with it and sometimes will create whole new industries. Do they always work, nope.

A good example is the "space race" if you only look at it as Americans just trying to beat the Soviet Union to plant a flag on the moon. Then you are right it was a terrible case of government waste. But look at what we learned and developed for those programs and what those industries and technologies that grew up to go to the moon have done for us since and I think it would be hard to say that the journey to the moon was not money well spent.

Or to continue the metaphor I started, helping your kids pay for college can be a great investment. Letting them mooch off of you so they can play video games all day long after they should have left the nest not so good.


RE: Awww poor E85
By RU482 on 10/18/2011 2:32:23 PM , Rating: 2
I wonder what the ratio of tax credits is to the taxes paid by people employed in the ethanol industry.


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