It’s hard to save money at the pump when your tax dollars have already paid for so much of the fuel you’re pumping. Here’s a breakdown of subsidies:
Blender’s credit: 51 cents per gallon
The federal government pays 51 cents for each gallon of ethanol that is blended with gasoline and delivered to gas stations. They call it the “blender’s credit.” This often goes to a middleman. For example, corn-based ethanol produced at the plant in western New York is picked up by Reid Petroleum, who blends the ethanol before delivering it to the Mobil Station at 12 Corners in Brighton. Reid Petroleum gets that 51 cents per gallon credit. So before you’re saving anything at the pump, you’re paying 51 cents per gallon for ethanol.
State tax credit: 15 cents per gallon
In the state of New York, ethanol producers can receive up to $2.5 million per year in tax credits from the state for their first four years. They get the cash in the form of a tax credit for each gallon of ethanol they produce. There’s no tax credit for the first 40,000 gallons produced, but after that they receive 15 cents for each gallon up to 15,666,667 gallons produced. The money comes from your state tax dollars. So before you’re saving anything at the pump, you’re paying 51 cents per gallon and then another 15 cents per gallon in state tax credits.
Subsidies and grants to build new plants
Just about every ethanol plant in the country has received some form of taxpayer assistance. Western New York Energy in Medina received $6 million from New York state and a $25 million federal loan guarantee. This means that they haven’t got a dime from your federal tax dollars, but if the plant folds, taxpayers are on the hook for $25 million. With each plant getting a different financial package, it’s nearly impossible to quantify the average subsidy per gallon. But it’s no doubt significant.