Clean & Renewable Energy

Matthew Langley

ENG 102

12June 2012

Clean & Renewable Energy

In 2007, during the State of the Union address, George W. Bush asked congress to"join him in pursuing the goal of reducing U.S. gasoline usage by 20 percent in the next ten years - twenty in ten." He also stated, “America is on the verge of technological breakthroughs that will enable us to live our lives less dependent on oil. And these technologies will help us be better stewards of the environment, and they will help us to confront the serious challenge of global climate change." If America could become less dependent on oil,this would be a great thing. Except for the mighty oil tycoons,certainly everyone else would agree. So how do we do this? How can this great country achieve such a lofty goal? Alternative energy is a phrase constantly thrown around. Maybe, then, alternative energy is the answer. When we contemplateon alternative energy we usually think of wind, solar, hydroelectric, electric, or something along those lines. The issue is that some of those sources do not generate enough energy to sustain the idea of efficient energy at their current technological stages. So then, what other alternative energy can we use?

Our politicians and the Department of Agriculture came up with what they thought was the answer. In 1978, the United States government approved the Energy Tax Act of 1978. This was a tax break for oil refineries that mixed their gasoline with ethanol. This also included subsidies for alternative energy and clean renewable energy. The refineries got forty cents back on every gallon of gas produced. In today’s market that doesn’t seem like a lot but, in 1978 a gallon of regular gas cost the consumer sixty-three cents a gallon. That’s roughly a sixty-three percent tax break for the refineries. This new incentive was great for the refineries, but how and where could they get all of this ethanol to blend? How could anyone provide enough ethanol to help run all the vehicles (planes, trains, cars, buses, lawn mowers, etc.) in America? There were roughly 150 million cars alone that drove American roads daily, just in 1978 (Department of Transportation, 2009).

The United States has been subsidizing our agriculture since before The Great Depression. Before The Great Depression these subsidies were called U.S. Farm Bills. After The Great Depression and the Dust Bowl, congress changed these subsidies – the Crop Insurance Program – which began in the 1930’s. In 1938, congress branched off a small department of government named the Federal Crop Insurance Corporation, operating under the USDA (United States Department of Agriculture). This new agency’s agenda and program was based off of giving and handling the subsidies to farmers and their agriculture. These subsidies were initially designed to help farmers when they had suffered losses of crop and yields. That way, America could ensure that farmers would keep farming, and we would continue to produce crops to feed a growing country. This was a great thing to any farmer, but especially to the grain farmer. Because of this and the Energy Tax Act of 1978, the grain farmer could grow corn with no risk for loss of crop, and receive an energy tax credit subsidy for the production of “renewable energy.” They could sell this corn to ethanol producers, who would also get a tax subsidy for creating “clean burning fuel.” This lined the pockets of many grain farmers and ethanol producers because they would keep the vast majority of profits. While being protected from losses, and receive high paying subsidies for this “clean energy.”

This is where the “corn subsidies” come into play. There are many who have heard of the government subsidizing corn, though many don’t know why. The truth is that it’s not a subsidy based on a particular plant, specifically corn, just that we have known how to make grain alcohol from corn for hundreds of years. Almost every penny of this subsidy or tax break goes to the oil companies and refineries. Hence, corn farmers benefit indirectly from this legislation. The incentive to use ethanol for the tax breaks has increased the supply and demand of corn, which in-turn increased its prices. Because of America’s history of easily making corn into pure grain alcohol for spirits, corn was the produce of choice to turn thatethanol into fuel. With this said, it made perfect sense for the ethanol producers to participate in the Energy Tax Act it; seemed like an easy thing to make fuel instead of whiskey. After all, in 1908 Henry Ford built the Model T to run off of gasoline or ethanol. Ford is also known as the alternative energy icon because of this.

So, many say that we need a clean burning, renewable fuel, to which I agree.Thanks to the subsidies and tax credits, some say we have found the answer in a clean burning fuel in the form of ethanol which, since the majority is produced from corn, it is also renewable. It also needs to be inexpensive to produce, and inexpensive for the consumer. The Energy Tax acts have evolved over the years to ensure this would be the case. In fact, Investor’s Business Daily says, “In their 33 years of existence, ethanol subsidies, the original poster child for crony capitalism, with an estimated cost of at least $45 billion and an annual price tag in recent years of $6 billion” (2012). NPR has a lower estimate of the actual costs, they say, “The multi-billion dollar ethanol subsidy expired on Saturday. Most of the ethanol added to gasoline in this country is produced from corn. And, of course, Iowa produces huge amounts of corn. But even in this political season, even as Iowa prepares to caucus today, Congress let the formerly sacred subsidies expire after more than 30 years and about $20 billion” (2012).