U.S. Senator Grassley, Colleagues Push to Extend Ethanol Credits

U.S. Senators Charles Grassley and Kent Conrad and 13 other lawmakers urged the government to extend incentives supporting the ethanol industry.

Grassley, a Republican from Iowa, and Conrad, a Democrat from North Dakota, wrote a letter to Senate Majority Leader Harry Reid and Minority leader Mitch McConnell, a day after a group of lawmakers urged Congress to halt the tax credit and tariff.

“Allowing the provisions to expire or remain expired would threaten jobs, harm the environment, weaken our renewable fuels industries and increase our dependence on foreign oil,” they wrote in the letter.

The 45-cent tax credit provided to refiners for each gallon of ethanol blended into gasoline and a 54-cent tariff slapped on Brazilian imports expire at the end of this year. Production of biodiesel has ground to a near halt since its $1-a-gallon incentive expired last year, according to the National Biodiesel Board, an industry trade group.

Senators Dianne Feinstein, a Democrat from California, Jon Kyl, a Republican from Arizona, and 15 other colleagues wrote a letter calling the subsidies “fiscally irresponsible and environmentally unwise.”

U.S. refiners are required to use 12 billion gallons of renewable fuels such as ethanol this year and 15 billion gallons by 2015 under a 2007 energy law.

“In the near term, an extension of the ethanol tax incentive and the tariff will stabilize the marketplace, provide added certainty and give Congress the opportunity to consider longer-term solutions next year,” Growth Energy, an ethanol industry trade group, said in an e-mailed statement.

U.S. ethanol output slipped 0.7 percent last week, the second straight decline, to 885,000 barrels a day, the Energy Department said today.

Production of conventional gasoline blended with ethanol tumbled 6.8 percent to 4.52 million barrels a day, the lowest level since April 30.

Poet LLC, based in Sioux Falls, South Dakota, is the largest U.S. ethanol producer, followed by Decatur, Illinois- based Archer Daniels Midland Co.

Iowa is the largest corn-producing state and North Dakota the 13th-largest, according to the U.S. Agriculture Department. The grain is used to manufacture ethanol in the U.S.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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