Big Oil vs. Big Ethanol

Everyone in Pennsylvania (save the Amish, who are also unlikely to be reading this blog) must have heard or seen the Barack Obama, anti-"Big Oil" ad dozens of times (including the Tribune-Review who editorialized on it today).

Obama claims that he doesn't take money from oil companies, which is true because no one does. It is illegal for corporations to contribute to political campaigns, though FactCheck.org points out that Obama takes plenty from oil company employees. And as the Tribune-Review rightly points out, Obama's windfall profits tax won't reduce the cost of fuel or make us "energy independent", but would rather increase the price of gasoline and make us more reliant on foreign gasoline producers (we have written more on this issue here).

But Obama's frequent citation that he opposes tax cuts for oil companies but supports subsidies for "alternative fuels" is what really needs responding to. The 2005 energy bill did provide some tax credits for oil companies, but according to the CBO report (see page 17), was more than offset by tax increases on refineries. In contrast, the lion's share of tax credits went to "Renewable Energy and Alternative Fuels". In fact, the total taxpayer subsidy for ethanol in the US is estimated to be between $9 and $11 billion dollars.

As readers of this blog should be well aware by now, ethanol is bad for air quality, increases the cost of food and gasoline, increases water shortages, won't make us energy independent, and is a bad deal for taxpayers.

So which candidate will start denouncing "Big Ethanol"?