Farmers, Ethanol Producers Likely OK with No Subsidy

A bill including language to end a $5 billion-a-year ethanol subsidy has been blocked, but an earlier vote by the U.S. Senate likely still signals that Congress may be willing to let the tax credit go.

The ethanol subsidy is due to expire at the end of the year. The ethanol-related language was part of a jobs
Tuesday and would have killed it early.

Ethanol experts like Iowa State University economist Bruce Babcock believe signs point to the 45-cent-a-gallon subsidy not being renewed. And they believe the ethanol industry will be fine without it.

Babcock says it’s a federal mandate to use alternative fuels like ethanol that drives demand, not the subsidy. And there’s no guarantee that ending the tax credit will ease high corn prices.