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Rep. Welch calls for repeal of subsidies to ethanol industry

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Posted on June 13, 2011 |
By Lee J. Kahrs



Welch on ethanol_3512.jpg
BARBARA WOODARD, AT her family's marina in Lake Bomoseen last Thursday, tells Rep. Peter Welch how the federal mandate to include ethanol in gasoline sold in the U.S. is harming small engines like the ones used by boaters in Vermont. Photo by Lee J. Kahrs

LAKE BOMOSEEN — Barb Woodard has seen firsthand the effects of ethanol on boat engines and it goes right to her bottom line.

“I think it’s a strong issue that needs to be addressed,” the co-owner of Woodard’s Marina said during a press conference hosted by Rep. Peter Welch, D-Vt., at the marina’s fuel dock last Thursday morning. “I would like to see a supply of non-ethanol fuel for recreational use.”

Welch used the marina on the southern end of Lake Bomoseen as a backdrop to discuss his co-sponsorship of the Repeal Ethanol Subsidies Today Act (H.R. 1188), which would end subsidies to the ethanol industry.

“There is no other industry I know of that gets three forms of incentives to stay in business,” Welch told the group of small business owners and sportsmen. “It’s just an upside-down policy that needs to be changed.”

Welch said ethanol producers get a direct 45-cent-per-gallon federal subsidy equaling $6 billion annually. There is also a tariff barrier in place so the ethanol industry is protected against competition. And, the U.S. government mandates the use of ethanol in fuel sold at American gas stations. These subsidies remain in place despite a General Accountability Office report that questioned the need to subsidize this mature industry, Welch said.

“It’s time to get rid of ethanol subsidies,” he said. “We’ve got a lot of budget problems in federal government right now. We’ve got to make sensible decisions, and ethanol is Exhibit A.”

Ethanol is a biofuel additive for gasoline derived from corn. The gasoline at American service stations can contain up to 10 percent ethanol, and ethanol production is a multi-billion-dollar business with a powerful congressional lobby.

Ethanol production in the U.S. began to rise in earnest in the late 1970s following the Arab Oil Embargo, but what began as a revolutionary idea — the “green” alternative motor fuel — has become a controversial and expensive product.

The problem is that ethanol in a gas tank attracts water, which then mixes with the gasoline and can create engine problems. It also dissolves plastic, over time destroying fuel lines and carburetors in small engine such as boat motors, chainsaws, lawnmowers, motorcycles and snowmobiles. It also reduces gas efficiency regarding miles-per-gallon, detractors say.

The effects of ethanol on small engines are compounded in Vermont by the fact that many of these small engines sit idle during the winter months, giving the biofuel ample time to attract water vapor and corrode plastic.

“You sit a boat up with ethanol in it for the winter, and you’ve got a problem,” Woodard said. “I just don’t like the stuff.”

She also said that the marina must pay more for hoses and fuel lines now manufactured to be ethanol-resistant.

Add to that the fact that the marina pays on average 20-25 cents more per gallon for ethanol-free gasoline, which must come from Canada through Ultramar, and the Woodards’ bottom line increases exponentially.

 Welch said he has bi-partisan support in the House on H.R. 1188 and said his co-sponsor is Republican Oklahoma Congressman John Sullivan.

Welch’s legislation does not include language that would force increased availability of non-ethanol gasoline to small businesses.

“Our position is to ‘Let the market work,’” Welch said. “If we took the subsidies away, we think the problem will solve itself.”

The congressman said he learned of the problems with ethanol through Vermonters who told him about the issues they were having with their small engines and business owners who were losing money.

Woodard said she hopes the legislation will be approved and believes providing non-ethanol gas in Vermont will boost tourism.

“We’re a tourist state,” she said. “I think a lot more people would come into the state if they knew they could get non-ethanol gas,” she said.

Welch agreed, and said he believes ending ethanol subsidies is the obvious course to take.

“If you have clear evidence that something’s not working, you should fix it,” he said. “You know it and we know it. The question is, why don’t we change it?’”

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