The Motley Fool Criticizes Ethanol Subsidies That Don't Exist

The Motley Fool Criticizes Ethanol Subsidies That Don't Exist

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The multimedia financial services company The Motley Fool criticized ethanol for allegedly relying on government subsidies -- despite the fact that subsidies for corn ethanol, which comprises the vast majority of ethanol used in the country, ended years ago.

In an April 5 Motley Fool post that was posted on USAToday.com, two of their "energy experts" discussed the viability of ethanol -- which currently comprises about 10 percent of the nation's gasoline supply - as an energy source and concluded that ethanol is overly reliant on government subsidies. Travis Hoium wrote that ethanol "requires government subsidies to exist," and Jason Hall agreed that ethanol is "not cost-competitive without government subsidies."

But the renewable fuel currently used in our gasoline supply is almost exclusively made from corn, and corn ethanol subsidies no longer exist; they expired at the end of 2011.

The Motley Fool may have conflated subsidies with the Renewable Fuel Standard (RFS), which does not provide a monetary tax break but does require refiners to blend increasing amounts of renewable fuels into the nation's motor fuel supply. However, according to the Congressional Budget Office (CBO), "[fuel] suppliers would probably find it cost-effective to use a roughly 10 percent blend of corn ethanol in gasoline in 2017 even in the absence of the RFS." So even if you (wrongly) considered the RFS to be a "subsidy," The Motley Fool's claim that ethanol needs subsidies to exist simply doesn't hold water.

According to the Environmental Protection Agency, the RFS plays a vital role in lowering greenhouse gas emissions and reducing dependence on foreign oil.

Meanwhile, immense subsidies are still being handed out to the polluting oil and gas industries -- a fact that was conveniently overlooked by The Motley Fool. President Obama has repeatedly proposed eliminating $4 billion in annual oil and gas handouts from the federal budget - only to have these proposals die in Congress.

Posted In
Environment & Science, Energy
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