WASHINGTON -- U.S. House Majority Leader John Boehner (R-OH) said on May 9 that a temporary reduction of the U.S. tariff on ethanol imports would help ease prices at the pump, reports Reuters.
"We don't have enough ethanol in production today. It's coming on board, but if we were to temporarily reduce the tariff on ethanol coming into our country, I think that would ease the pressure that's out there, resulting in lower gasoline prices," Rep. Boehner told reporters.
Last week, President Bush called on Congress to lift the current tariffs on ethanol imports. When asked if the House and Senate had enough votes to lift the tariffs, Boehner told reporters, "I think it's possible."
"NACS and SIGMA propose the action that would have the most significant positive effect on supply and dampening effect on price increases in the next six months would be the temporary suspension of the tariff on imported ethanol," NACS 2004-2005 Chairman Bill Douglass, CEO of Douglass Distributing Company in Sherman, Texas, said on March 29 while testifying before the Senate Environment and Public Works Committee. "This suspension would be adopted to ease the transition of the domestic ethanol industry through the period of increased ethanol demand caused by decreased MTBE use and its inability, despite its best efforts, to totally fill the supply gap left by MTBE."
"We are very pleased that President Bush, House Majority Leader Boehner and other prominent leaders in Congress have recognized that removing the tariff on imported ethanol can have a positive effect on the market," NACS Vice President of Government Relations John Eichberger told NACS Daily. "This remains a serious political issue, but we are hopeful that sound, consumer-focused policy will prevail and applaud those who are willing to take on the fight."
However, not all members of Congress would agree.
"Lifting the tariff would be a victory for the oil companies, a kick in the face to rural America where the ethanol comes from, and leave consumers with the same high gas prices we have today," said Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, which is the committee that would review tariff legislation.
Rep. Boehner commented to Reuters that not all ethanol industry representatives are opposed to the idea of easing U.S. ethanol import tariffs.
"(They) are supportive of this because to the extent they can use imported ethanol to help establish the market while bigger plants are being built, it would be a big benefit to them," Rep. Boehner said.
In an op-ed originally published May 6 in the Miami Herald and Brazilian newspaper Folha de S. Paulo, Sen. Richard Lugar (R-IN) and Brazilian Ambassador to the United States Roberto Abdenur expressed their support for removing the U.S. tariff imposed on Brazil's ethanol imports.
"Our two countries need to accelerate their cooperation … Brazil and the United States should combine their strengths to contribute to the region's economic, social and political development," notes the op-ed. "We both face challenges to our energy security from the sharply rising worldwide demand for energy … But amid this new energy threat, we also have an opportunity to fashion a win-win response that could benefit both our countries."
Sen. Lugar and Ambassador Abdenur suggest that one solution would be to import more Brazilian ethanol to the East Coast, "where transportation costs significantly raise the price of Midwest ethanol." Accordingly, this would also require the U.S. to lift the tariff on Brazilian ethanol. "It makes strategic sense to import environmentally friendly ethanol from a reliable friend like Brazil in our own hemisphere," notes the op-ed. "After all, the United States doesn't tax imported crude oil, which pollutes and often comes from unstable suppliers."
Several pieces of legislation to repeal the tariff on imported ethanol have been introduced in both the House and the Senate.