ALEXANDRIA, Ind. —
Poet officials and local farmers have said there shouldn’t be much, if any, effect felt locally from the recent expiration of two ethanol subsidies — a 45-cent-per-gallon tax credit to oil refiners for blending ethanol and a 54-cents-per-gallon tariff on ethanol imports.
The subsidies had been in place since the 1980s with the purpose of decreasing the country’s use of imported petroleum. They expired when Congress took no action to renew them at the end of the year.
Poet General Manager Dave Hudak said there will be no effect on the plant. The ethanol industry in general and Poet specifically are equipped to continue with or without the subsidies. He said Poet has increased its efficiency and production and decreased its water and energy consumption.
The subsidies, Hudak stressed, never came to Poet. The tax credit, which cost the government nearly $6 billion last year, went to gasoline refiners that mixed ethanol with gasoline.
Hudak said instead of just allowing the subsidies to expire he championed they be redirected to investments in infrastructure. The Freedom Fueling Plan — created and promoted by Growth Energy, a leading advocacy organization for domestic ethanol — proposes that a large portion of the subsidies shift to pay down the national debt and the rest go toward investment in infrastructure needed to help sustain ethanol.
The infrastructure investments need to go toward blender pumps and the automotive industry to create more flex-fuel vehicles, Hudak said.
There are just a handful of blender pumps across the state, he added. Those pumps allow consumers the choice of what percentage of ethanol to include in their gas from 10 percent up. At nearly every fueling station consumers can only choose traditional gasoline that contains 10 percent ethanol or find a station that carries E-85, which contains 85 percent ethanol and can only be used in flex fuel vehicles.
Local farmers, Hudak pointed out, shouldn’t feel any effects either. Production and buying levels at Poet have and will continue to remain the same since the expiration.
Ron Filbrun, Pendleton-area corn and soybean farmer, said he doesn’t expect farmers to feel much of an effect. He said the costs may shift, but overall there should be little to no effect.
Michael Hicks, a Ball State University economist, agreed that farmers’ impact would be minimal. But he said while a well-established company like Poet won’t feel much effect, other ethanol refineries may have to reconfigure their operations to handle something else as he expects their effects will be much greater.
Consumers, though, shouldn’t feel much of a pinch as the cost of the tax subsidy is shifting from taxpayers’ pockets to the pockets of ethanol users — essentially like “moving your wallet from your back pocket to your front pocket,” Hicks said.
Nearly 40 percent of the country’s corn crop goes to ethanol and byproducts. Indiana makes 1.1 billion gallons of ethanol every year in 13l plants across the state, consuming 407 million bushels of Indiana corn each year, according to Growth Energy. The state’s ethanol industry has created 3,486 full-time jobs in Indiana, and the economic activity the industry generated contributed $497 million to the state’s gross state product last year, the organization stated.
Contact Abbey Doyle: 640-4805, abbey.doyle@heraldbulletin.com
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Kalynn Meyncke of Elwood unloads a trailer of corn at Poet.
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Poet, farmers: Little to no effects from subsidy's end
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