Ethanol Lobby Blinks, Backs $2.5-Billion Subsidy Reduction

Senator Tom Coburn of Oklahoma wants to eliminate the ethanol blenders credit. That's the 45 cents per gallon we give refiners to mix ethanol in their gasoline. Coburn also wants to end the 54-cent tariff on imported ethanol, which we use to keep Brazil's cane-sugar ethanol from competing with our corn whiskey.

Coburn has sixteen Republican signatures on his cloture motion, which will force a vote today on his ethanol amendment. He says he has the 60 votes necessary to pass it.

That threat is enough to forge bipartisan spirit among corn state senators. Our own Republican John Thune and his Democratic neighbor from Minnesota Amy Klobuchar are offering their own proposal, the Ethanol Reform and Deficit Reduction Act. Senator Tim Johnson has his name on the bill, too, as does Minnesota's Al Franken (see, Republican friends? Al's a swell guy!). The plan:

• The blenders credit kicks in only when oil drops below $90 a barrel. At that point, we give blenders 6 cents per gallon of ethanol.
• The credit increases if oil goes down more, to a maximum of 30 cents per gallon if oil drops below $50 a barrel.
• We save $2.5 billion (compared to Coburn's savings of $6 billion).
• $1 billion goes toward deficit reduction.
• $1.5 billion goes toward blender pumps and other support for ethanol.
• Keep the $1.01-per-gallon subsidy for cellulosic ethanol.

The ethanol industry backs the Thune-Klobuchar plan. The American Coalition for Ethanol, Poet's lobby group Growth Energy, the National Corn Growers Association, and the National Farmers Union (among others) all back Thune-Klobuchar over Coburn. Evidently the industry is worried enough about Coburn's momentum that they are willing to give up a billion dollars.