Center for Agricultural and Rural Development Study Shows...

Biofuels Journal
Date Posted: July 20, 2010

... U.S. Ethanol Production and Corn Demand Will Grow With or Without Subsidy and Tariff

Ames, Iowa—America's growing interest in renewable fuels has spurred a robust discussion about the pros and cons of continuing or changing current U.S. federal government ethanol policies, specifically, (1) mandates to increase the use of renewable fuels like ethanol from approximately 13 billion gallons today to 36 billion gallons by 2022, (2) a 45-cent-per-gallon tax credit for "blenders" who add ethanol to gasoline, and (3) a 54-cent-per-gallon tariff, which increases the price of foreign imports.

A new staff report by Bruce A. Babcock, director of the Center for Agricultural and Rural Development (CARD) and a professor of economics at Iowa State University, projects that allowing the blender credit and tariff to expire would have neither the dramatic, adverse effect U.S. ethanol producers claim nor create the export bonanza foreign producers hope for.

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