Farmers, ethanol makers likely OK with no subsidy

Published 2:33 pm Tuesday, June 21, 2011

CHAMPAIGN, Ill. (AP) — A tax credit that’s helped build up the ethanol industry is set to expire at the end of the year and may go away sooner — but experts say the industry can get by without it.

The 45-cent-a-gallon credit goes to oil companies that blend ethanol into gasoline. The Senate voted to do away with it. That vote may be symbolic, but it’s significant that lawmakers appear ready to let the credit expire rather than renew it.

Iowa State University economist Bruce Babcock says the industry will be fine because it relies mainly on a federal mandate to use alternative fuels like ethanol.

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Industry groups hope for a smaller credit that would kick in occasionally. They also want some of the $5 billion saved directed toward industry infrastructure.