2010 won't be all lemons for BP. Sure, the company will be best remembered for blowout preventers, top kill and Tony Hayward, but along the way the oil giant stands to make a killing from its investment in the US ethanol industry and the special tax breaks that came with it. In fact, the company could pull in well over half a billion dollars in '10 alone, courtesy of the US taxpayer.
How?
Through the Volumetric Ethanol Excise Tax Credit or VEETC, which flows to refiners who blend ethanol into gasoline, including big oil companies such as BP.
"As one of the largest blenders and marketers of biofuels in the nation," BP brags on its website, "we blended over 1 billion gallons of ethanol with gasoline in 2008 alone."
In 2008 the VEETC was worth 51 cents per gallon, so that would have netted BP roughly $510 million in tax credits. Currently the VEETC is 45 cents per gallon, but it is highly likely that BP is blending more ethanol now than they did in 2008.
Between 2005 and 2009, U.S. taxpayers forked over $17 billion through the VEETC to subsidize corn ethanol and got for their money a reduction in oil consumption equal to an unimpressive 1.1 mile-per-gallon increase in fleet-wide fuel economy. Here is EWG's recent analysis of the VEETC boondoggle.
This meager degree of energy independence could have been accomplished for free by proper tire inflation, driving sensibly, obeying the speed limit and using the right grade of motor oil.
Of course, the ethanol industry and its Washington lobbyists never miss an opportunity to complain when environmentalists target them instead of big oil.
"It is unfortunate that groups purporting to represent the environment are still criticizing the only alternative fuel -- domestic ethanol -- that reduces our dependence on foreign oil," said Tom Buis, CEO of Growth Energy, in June. Read more here:
Congress is currently debating an energy bill that would extend VEETC so that BP and others, including our friends in the ethanol industry, can continue to be propped up with taxpayer dollars.
Here's an account in today's (July 2) CongressDaily:
ETHANOL CREDITS HAVE A MAJOR BENEFICIARY IN BIG OIL FIRMS By Peter CohnBP could stand to reap federal tax credits approaching $600 million this
year for blending gasoline with corn-based ethanol, making the British oil
and gas giant one of the largest beneficiaries of the 45 cents-per-gallon
ethanol incentive.The credit expires Dec. 31, and the House Ways and Means Committee is
preparing as early as next month to debate a "green jobs" bill eyed as a
vehicle for an extension. Environmentalists are seizing on the generally
low esteem the public holds for BP at the moment, with the future of the
roughly $5 billion-a-year ethanol credit in the balance."Generally, we feel that after 30 years, it's finally time for ethanol to
stand on its own," said Dusty Horwitt, senior counsel at the Environmental
Working Group. "These massive handouts flow to oil companies like BP and
only cement our dependence on environmentally damaging sources of energy
... the other issue here, with BP, is that Congress has created this $5
billion-a-year energy program and taxpayers have little idea who's getting
the money."
To see responses from key congressional players and industry reps, read Cohn's full piece here:
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I have to disagree, you appear to continue to rely on oil for our transportation energy and that's going to become more difficult to sustain as we deplete that finite source. If you believe the answer is natural gas and the U.S. has an abundant supply of natural gas then why resort to fracking for its extraction ( fracking is a gift of Halliburton and Cheney). If you believe electric is the alternative to oil then you are probably not aware that lithium batteries require cobalt, cobalt is a limited resource found primarily in inhospitable regions of Africa - so we would be continuing our reliance on a finite resource.
While ethanol is not an ideal fuel it does provide a transition to cellulosic biofuel, which is made from non food sources like municipal waste (garbage), crop residue and specialty crops such as energy cane (can be grown in poor soil, root structure left intact at harvest retains CO2).
While I don't have the figures to prove it I would guess that most American's consumption of corn is via snack foods and soft drinks, in the form of high fructose corn syrup. If you want too see this Nations next big environmental disaster in the making look into FRACKING.