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CORPORATE NEWS AND EVENTS
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The Federal Ethanol Program The Arab oil embargoes of the 1970s resulted in record high oil prices and widespread gasoline shortages, wreaking havoc on the U.S. economy. At the same time, a U.S.-imposed grain embargo on the former Soviet Union following its invasion of Afghanistan resulted in the loss of a valuable export market and caused grain prices to plummet. To address these problems, Congress passed The Energy Security Act of 1979. The law created a federal ethanol tax incentive to reduce our nation's alarming dependence on imported oil and create an important value-added market for U.S. grain through the production of a domestic, renewable fuel. What is it? Gasoline marketers (not ethanol producers) can claim the federal ethanol tax incentive. It is designed to encourage gasoline marketers and blenders to utilize ethanol, thereby increasing demand for ethanol and enhancing energy security. The ethanol tax incentive has been especially helpful to small, independent gasoline marketers by allowing them to price-compete with the major international petroleum companies. Such price competition has consistently restrained retail market prices and thereby generated substantial benefits for consumers of gasoline, according to the Society of Independent Gasoline Marketers of America. How does it work? In 2004, the American Jobs Creation Act of 2004 was signed into law, and it made important improvements to the ethanol tax incentive. The legislation created the Volumetric Ethanol Excise Tax Credit (VEETC), which maintains the ethanol incentive at 51 cents per gallon of ethanol used in fuel, but replaces the previous excise tax exemption with an excise tax credit. The law extended the tax incentive through December 31, 2010. VEETC ensures that all highway revenues are collected and deposited in the Highway Trust Fund. It provides greater flexibility to refiners and marketers to use ethanol, and will open up markets for ethanol use in, such as E-85. Click here to access comprehensive information about VEETC and how it works. A Success Story: The federal ethanol program has been a tremendous success, helping to build a strong domestic energy resource. From just over 10 million gallons of production in 1979, the U.S. ethanol industry has grown to 4.0 billion gallons of annual production capacity in 2005. Today, approximately 30% of the nation's gasoline is blended with ethanol - reducing the demand for imports, stimulating economic benefits across the country, and reducing air pollution. And the federal government realizes a net gain annually due to increased tax revenues and reduced farm program costs. Source: Renewable Fuels Association |
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