Green Energy News | April 28, 1997

April 28 1997 – Vol.2 No.4

ENERGIES... week of April 28, 1997

ETHANOL TAX HIKE will drop crop prices, according to a new study by the Food and Agriculture Policy Research Institute (FAPRI). If the U.S. Congress gets its way and the excise tax break for corn-based ethanol is eliminated, crop cash receipts could drop as much as $1.9 billion.

The reason? The tax exemption keeps corn-based ethanol flowing. Without it the business isn’t profitable. If the ethanol business drops by the wayside, farmers who previously supplied the ethanol industry will switch to other crops. The agriculture markets could be swamped with livestock feed, high-fructose corn syrup, foods and exports. As any good first year economist knows, too much of a good thing brings down prices. Flooded markets of certain crops will bring down prices across the board, hurting farmers who no longer have price supports also eliminated by Congress.

The study also says that if the tax break is kept in place ethanol corn demand could reach 664 million bushels by 2005-2006 up from 500 million predicted for this year and next. Further, a drop of the exemption would likely cause gasoline prices to go up a bit.

STUDENTS HAVEN’T ABANDONED ETHANOL. May 13-14 marks the 9th Annual Ethanol Super Mileage Challenge to be held at the Brainerd International Raceway in Minneapolis, Minnesota. Students from some 50 high schools around the country will compete for the highest fuel economy in their prototype ethanol-gasoline powered cars.

Simple rules for the economy challenge include that a mandatory 4-stroke one-cylinder Briggs and Stratton engine be used and that at least three wheels be kept on the ground at all times. The free-form design rules have allowed for some innovative designs. Last year one car got an amazing 700 miles to the gallon, another car over 500.

The purpose of the challenge is to bring public awareness to ethanol, fuel economy in general and to give the students a chance to use their young creative minds. Perhaps members of Congress bent on eliminating the ethanol tax break, which could destroy the industry, should attend the event to learn a little from the high schoolers.