Ethanol blender pumps pulled in Senate

Oct 24, 2011
by WLJ

A proposal that would have stopped subsidies for new gas station pumps to boost ethanol sales failed to make it into the Senate’s version of USDA’s fiscal 2012 budget last Wednesday.

The measure, proposed by Sen. John McCain, R- AZ, in an attempt to trim federal spending, would have prevented USDA from offering grants and loans for rural gas stations to install “blender pumps.”

The pumps would have made it possible for consumers to blend gasoline with ethanol (E85) by as much as 85 percent in vehicles that can use ethanol.

The opponents of McCain’s amendment argued that if passed, it would have cut down on the amount of choice consumers have at the pump.

“By specifically singling out the ethanol molecule for exclusion, this amendment is seeking to kill new technologies using algae, wood waste, garbage and other feedstocks that would produce ethanol in their infancy,” the Renewable Fuels Association said in a released statement. “Amer ica needs jobs, and domestic ethanol production is a proven method to create those opportunities. We already know what we get by outsourcing our energy future.”

But McCain withdrew his amendment before the Senate could vote on whether to attach it to the agriculture appropriations bill.

No reason was provided.

The House version of the bill has a similar provision that would prevent USDA from spending money on blender pumps. Lawmakers from the House and Senate will have to negotiate the issue when they finalize funding for USDA for fiscal 2012.

The Senate version of the bill proposes $4.5 million for the USDA program that would fund the pumps, among other rural energy efforts, while the House approved $2.3 million for the energy program—with the proviso money not go for pumps.

This proposed amendment marks McCain’s second attempt to cut off funding to the ethanol industry.

In June, the same amendment was voted down 41- 59.

Critics of ethanol’s government funding have said the industry should be able to stand on its own. The industry has been receiving subsidies since the 1970s.

“In these tight economic times when we are asking families to do more with less, we should not be subsidizing gas pumps at retail gas stations,” said Brian Rogers, a spokesman for McCain. “The ethanol industry needs to prove it can prosper on its own and quit asking for taxpayer handouts.”

Ethanol makers expect to lose a tax credit worth $6 billion per year at the end of 2011 and have said government subsidies for infrastructure would help make up for that loss.

The tax credit has been in place since 1978 and has long been supported by lawmakers from farm states who wanted to help grow demand for corn.

But the subsidies have become controversial as corn prices rose to recent record levels.

Most gasoline sold in the U.S. is a mix of 10 percent ethanol, although the Environmental Protection Agency has approved 15 percent blends for newer models of cars and trucks.

In April, Agriculture Secretary Tom Vilsack said the administration wants to install 10,000 flexible fuel pumps nationwide in the next five years.

At the time, less than 2,500 of the nation’s 167,800 gas stations offered E85 fuel. — WLJ