US ethanol industry faces most tumultuous year ever - RFA

21 February 2011 17:21  [Source: ICIS news]

US officials recently approved subsidy for corn-based ethanolPHOENIX, Arizona (ICIS)--The US ethanol industry faces its most tumultuous year ever, industry group Renewable Fuels Association (RFA) said on Monday, predicting opposition against government support for ethanol will escalate in 2011 because of fiscal problems in the US.

“Today, Washington is consumed with putting its fiscal house in order - disorder created in no small part by the economic turmoil caused by the $140/bbl oil price and the subsequent economic free fall,” said RFA president Bob Dinneen at the opening of the National Ethanol Conference in Phoenix.

Dinneen said government support for ethanol could end at the end of 2011, citing cuts already done in other areas of the economy.

“If the president of the United States is willing to put heating assistance for poor Americans on the chopping block...then few programs will be spared. Everything is on the table; or should be,” he said.

The US in December 2010 renewed subsidies given to the ethanol industry, including a 45 cent/gal credit given to fuel blenders to mix ethanol in gasoline and a 54 cent/gal tariff levied on imported ethanol.

The tariff and the blender credit are set to expire at the end of 2011, unless Congress renews them again.

Dinneen warned industry delegates that convincing lawmakers that government support for ethanol should continue would be an uphill battle, adding that Congress appears ready to end the ethanol tax incentive programme in its current form and cost.

The US is facing a mountain of debt, he said, citing a $1,500bn budget deficit and a $14,000bn public debt that is about equal to the total US gross domestic product (GDP).

“Capitol Hill is now ruled by bean counters and its effects will be seen in every bill moving through Congress,” Dinneen predicted, adding that reining in spending would be a US priority over the next several years.

“An expiration of the tax incentive is a very real possibility,” he told delegates.

The 16th National Ethanol Conference opened on Monday. The event, which is organised by the RFA, will close on Tuesday.

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By: William Lemos
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