INCREASED GAS PRICES PINNED ON VEETC EXPIRY
Will somebody just shout out a big ‘old, “I told you so!” The truth couldn’t cut through the noise of the naysayers bashing ethanol and the VEETC, commonly called the “ethanol subsidy.” Leading up to VEETC’s expiration on December 31, 2011, it was blamed for everything from high corn prices to low corn prices and high food prices and making people fat. But none of these people stopped to think about the fact that when passed along to consumers, VEETC actually made gas less expensive.
When corn farmers and the ethanol industry were asked to weigh on in VEETC’s expiration, it was clear to us that without VEETC there would likely be a rise in gas prices. But given the current federal budget situation, industry decided that it was time to let the tax credit expire, allowing the ethanol industry to do its part to help reduce the federal deficit. Too bad oil companies didn’t offer up any of their own century-old subsidies.
“As corn farmers, we studied this situation and understood that higher gas prices could be a consequence of ending the VEETC. We made that situation quite clear to Congress. But upon reflecting on the purpose of the tax credit as it was initiated, and taking into consideration the condition of our federal budget, we knew that the time had come to let VEETC expire,” said Illinois Corn Growers Association President Jeff Scates.
“The bottom line is this. We should anticipate additional uncertainty when it comes to gas prices in 2012, and that’s not because of ethanol,” Scates added. “But I wouldn’t anticipate ethanol’s critics to line up and take credit for it, no matter how well deserved that credit may be.”
According to a Bloomberg News story, “U.S. Gasoline Rises to $3.36 a Gallon, Lundberg Survey Shows,” the average price for regular gasoline at U.S. filling stations rose 12.03 cents to $3.3596 a gallon in the three-week period ended January 6. It was the first increase in survey results since the period that ended Oct. 21. Prices are 27.84 cents higher than a year earlier, when the average was $3.0812.
‘“Wholesale prices were up 19.5 cents and at least part of the wholesale price increase came from the cancellation of the ethanol subsidy,” Lundberg said yesterday. “It looks as though if crude oil prices didn’t reverse themselves, we would see an additional five to 7 cents” a gallon for gasoline. Gasoline for February delivery on the New York Mercantile Exchange rose 26.46 cents, or 11 percent, to $2.7516 a gallon in the three weeks ended Jan. 6.”