Kyl & Feinstein Call For Eliminating Ethanol Import Tariff

U.S. Senators Jon Kyl (R-AZ) & Dianne Feinstein (D-CA) announced that they will introduce legislation on Monday to strike the 54 cent ethanol import tariff. If passed, the bill would provide more economical options to U.S. refineries that are now required to use ethanol as part of the comprehensive Energy Bill that was signed into law last year. Suspending the tariff on ethanol is another step that Congress can take to ease the pressure at the pump, said Senator Kyl. The federal government set mandates for ethanol use in gasoline. Due to this mandate, the demand is outpacing supply, which further contributes to the soaring gas prices we are experiencing. Suspending the ethanol tariff will help open alternative avenues of supply.

Giving the ethanol industry a triple subsidy in the energy bill last year was a terrible mistake, Senator Feinstein said. If they are going to be forced to use ethanol, our refineries should have the choice to buy it from the cheapest seller. They should not be constrained by artificial protectionist tariffs. Now that the ethanol mandate is law, U.S. taxpayers should no longer be asked to shoulder the costs of these subsidies. So the time has come to strike the 54 cent per gallon import tariff & give drivers a break at the gas pump.

Currently, the U.S. provides the domestic ethanol industry with a 51 cent tax credit per gallon. In addition, it imposes a 54 cent per gallon tariff on importing ethanol that prevents refineries from buying ethanol from wherever it is cheapest on the global market. This year alone, the U.S. government will require refineries to use 4 billion gallons of ethanol. And this requirement will only increase in the years ahead, climbing to 7.5 million gallons in 2012 & increasing incrementally every year thereafter. And with the refineries choosing to phase-out MTBE this year, the demand for ethanol is even greater than was expected for this year. It is not clear if the domestic supply will be able to meet that growing demand.