Could GOP wins in the midterm elections mean trouble for ethanol producers?
Following the Republican Party's capture of a majority in the House of Representatives, U.S. policy on the use of biofuels for transportation could be about to change, according to an article on Forbes.com.
Current policy is based on the use of "blender credits" to encourage the mixing of biofuels with gasoline and a 54-cent-a-gallon tariff levied on imports of ethanol, the most widely used biofuel. These policies are due to expire at the end of this year, and Republican deficit hawks do not want them renewed.
Current U.S. legislation calls for the volume of ethanol that must be mixed with gasoline to increase annually. In the past, tax credits and the higher price of gasoline relative to ethanol have encouraged fuel blenders to surpass these quotas. But both incentives may soon disappear, the article states.
A push to allow individual states to opt out of these federal mandates or a scrapping of this mandate could lead to upward pressure on the price of ethanol if supply falls and the transportation market created for ethanol remains.