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dan45mcc

Push to Credit E85

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WASHINGTON -- While high gas prices have made E85 seem like a bargain lately, advocates for the biofuel know that relationship is only as permanent as the current prices of crude and corn. With that in mind, ethanol proponents are stepping up pressure on Congress to grant a permanent tax credit for E85.

 

The Governors' Biofuels Coalition, a group of ethanol state governors and some international players, sent a letter last week to Representative Dave Camp ® and Senator Max Baucus (D), chairmen of the House Ways & Means Committee and Senate Finance Committee, respectively, as well as two ranking members to encourage them to include E85 in the definition of the Alternative Fuel Tax Credit and recommending that the provision be extended as part of the pending "Extenders Bill."

 

E85 retailers are currently selling the biofuel without the benefit of a 38.25-cent-per-gallon (CPG) credit they formerly enjoyed before the Volumetric Ethanol Excise Tax Credit (VEETC), which expired at the end of 2011. While E85 is defined as an alternative fuel in the Energy Policy Act of 1992, it was excluded from a 45-CPG tax credit given to other alternative fuels to avoid "double-dipping" incentives while VEETC was still active.....

 

....Industry experts agree that ideally, E85 needs to be priced at a 25% to 30% discount to regular gasoline to be competitive, because of its lower fuel economy. The spread was widest in April at 14.5%, after falling to only 7.1% in December 2011, according to E85prices.com. Currently, the average spread is 13.8%, with eight states showing a greater than 15% spread. In the site's poll of flex-fuel vehicle (FFV) drivers, nearly 55% said they buy E85 when the spread is 20% or greater.

 

http://www.cspnet.com/news/fuels/articles/push-credit-e85

 

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Again I am MORE in Favor of widening the Price Spread by bringing down the cost of corn by lowering E10 ..to E6 or E7  until next generation / cellulosic ethanol can start contributing volume.. (lowering the high volume demand on ethanol as a additive would reduce demand on corn bring down the price )

 

 

But since that isn't likely to happen then yes bring back a credit for high blends as long as it is understood and written up as a temporary solution .. Phase it out over 5 years .. 38 cents , 30 cents , 22 cents , 14 cents , 6 cents.. 

 

 

You also have to ensure that credit is actually passed on to the consumer

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I see your point dan, but can't seem to bring myself to support further tax credits, even if defined as short term.  Governments don't have a good record of sticking to short term agreements.  Wasn't the income tax only suppose to be short term during WW1?  Wasn't the DoE suppose to be a short term solution to end our reliance on imported energy?

 

Past tax credits for ethanol very rarely went to the consumer or even the producer... mostly went to the blender/distributor/big-oil.  These folks don't need subsidizing.

 

After decades of supports, subsidies, credits and mandates, the once fledgling ethanol industry (which I'd say is entering adolescence now) is trying to find it's place in the market.  Intervention at this point would only delay/prevent market forces from taking effect.

 

I'm an avid e85 user, and don't get me wrong, who wouldn't like to see the price they pay subsidized to lower... but I don't think it would help/be worth it IMHO.

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There is a credit for Alternative fuels already and has been.  The problem is E85 was never considered an Alternative fuel because of the blender credit which is now expired. E85 is screwed right now because of the blenders credit of the past. I think we all agree that E85 and not E15 is a true alternative yo gasoline.

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I see your point dan, but can't seem to bring myself to support further tax credits, even if defined as short term.  Governments don't have a good record of sticking to short term agreements.  Wasn't the income tax only suppose to be short term during WW1?  Wasn't the DoE suppose to be a short term solution to end our reliance on imported energy?

 

Past tax credits for ethanol very rarely went to the consumer or even the producer... mostly went to the blender/distributor/big-oil.  These folks don't need subsidizing.

 

After decades of supports, subsidies, credits and mandates, the once fledgling ethanol industry (which I'd say is entering adolescence now) is trying to find it's place in the market.  Intervention at this point would only delay/prevent market forces from taking effect.

 

I'm an avid e85 user, and don't get me wrong, who wouldn't like to see the price they pay subsidized to lower... but I don't think it would help/be worth it IMHO.

 

I understand where you are coming from Husker and realize this will feed the "anti-subsidy folks" BUT E85 users in most states pay more road tax per mile than ANY other fuel user. In fact if driving the typical FFV-roughly about 24% more than gas and 30% more than diesel users since taxes are volumetric rather than energy based. Until that is fixed (with govt always loves hidden taxes that bring more revenue so forget it being fixed) then an outright alternative tax credit is needed to at least balance it with other new alternative fuels (and gasoline) that it competes with. In my state CNG not only gets a lower state tax (it and LPG are taxed with btu adjustment) but also qualifies for the alternative fuels credit I believe.

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