The economics of U.S. ethanol policy: A rebuttal

The Hill (blog)
By John M. Urbanchuk, technical director, ENTRIX - 07/27/10 04:23 PM ET

In his July 27 blog posting “The economics of U.S. ethanol policy” Professor Bruce Babcock of Iowa State University reports the results of new research suggesting that allowing the current 45-cent-per-gallon ethanol blender’s tax credit (Volumetric Ethanol Excise Tax Credit, or VEETC) and 54-cent-per-gallon ethanol tariff to expire on Dec. 31, 2010 would have little or no adverse impact on the domestic ethanol industry.

That’s true only if you take a “Field of Dreams” view of the ethanol industry: If we mandate that Americans use more ethanol, then someone, somewhere will produce that ethanol.

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