Oil Companies Gain Billions from Government Ethanol Credits

Monday, July 05, 2010

Government subsidies for ethanol benefit not only the producers of the corn-based fuel additive, but also major oil companies. For every gallon of ethanol used in gasoline, an oil company receives 45 cents, and those credits have added up to more than $3 billion a year for the industry. BP, public enemy No. 1 these days among oil giants, thanks to the Gulf of Mexico oil spill, stands to receive $600 million for blending gasoline with ethanol.

According to a report by the Environmental Working Group, “Between 2005 and 2009, taxpayers spent a whopping $17 billion to subsidize ethanol. In return, they got a reduction in overall oil consumption equal to an unimpressive 1.1 mile-per-gallon increase in overall fuel economy.”
Environmentalists are trying to use the gulf disaster as leverage to convince Congress that the ethanol tax credit, set to expire at the end this year, should not be renewed. “Generally, we feel that after 30 years, it’s finally time for ethanol to stand on its own,” Dusty Horwitt, senior counsel at the Environmental Working Group, told CongressDaily. “These massive handouts flow to oil companies like BP and only cement our dependence on environmentally damaging sources of energy.”
-Noel Brinkerhoff
Driving Under the Influence: Corn Ethanol & Energy Security (by Craig Cox and Andrew Hug, Environmental Working Group) (pdf)


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