So here's how it works folks if we thought Obama got one over on an oil company.
BP's oil-spill cleanup bill, so far: $3.2 billion
Money BP is setting aside for the total bill: $20 billion
Annual cost of U.S. ethanol subsidies: $5 billion
Ethanol subsidies going to BP this year: $600 million
Conclusions: Every four years, U.S. taxpayers are subsidizing the energy firms by an amount equal to the maximum that BP expects to spend on the cleanup. BP specifically will collect an equivalent amount every 33 years. This year's BP ethanol subsidy by itself will offset about 20 percent of what BP has spent on the cleanup so far.
And that's just one subsidy program.
Tell me again why this "green economy" stuff is not a scam.
The banks paid back their TARP money, and the nation remains scandalized by that bailout. What are the chances the energy industry is going to pay back a penny of the billions we're pouring on them through green energy subsidies?"
"Ethanol Credits Have A Major Beneficiary In Big Oil FirmsFriday, July 2, 2010 Source CongressDaily
"BP could stand to reap federal tax credits approaching $600 million this year for blending gasoline with corn-based ethanol, making the British oil and gas giant one of the largest beneficiaries of the 45 cents-per-gallon ethanol incentive.
The credit expires Dec. 31, and the House Ways and Means Committee is preparing as early as next month to debate a "green jobs" bill eyed as a vehicle for an extension. Environmentalists are seizing on the generally low esteem the public holds for BP at the moment, with the future of the roughly $5 billion-a-year ethanol credit in the balance.
"Generally, we feel that after 30 years, it's finally time for ethanol to stand on its own," said Dusty Horwitt, senior counsel at the Environmental Working Group. "These massive handouts flow to oil companies like BP and only cement our dependence on environmentally damaging sources of energy ... the other issue here, with BP, is that Congress has created this $5 billion-a-year energy program and taxpayers have little idea who's getting the money."
Ethanol backers say the BP argument is a straw man. "I don't think that has any legs," said House Agriculture Chairman Collin Peterson. He said the credit keeps ethanol competitive with oil until it can be marketed on a level playing field, including special blenders' pumps at gas stations and boosting the limit on how much ethanol can be blended with gasoline.
"It's all my environmental friends standing in the way of us getting complete access to the marketplace, because they really don't like ethanol. If they had their way, we'd all walk," Peterson said. "We're willing to compete; we're willing to phase out this ethanol tax credit, when we get equal access to the market."
The credit is claimed by the gasoline supplier for each gallon of ethanol blended in. The ethanol industry benefits from the incentive for refiners to buy their product -- although critics say incentives aren't needed because ethanol production is mandated under federal law. And under contracts between producers and refiners, some pricing benefit can be built in based on the credit, so a supplier may pay a little extra to the producer knowing they will get 45 cents a gallon back at the pump.
Still, a common misconception is that it's the ethanol producer receiving the direct benefit, when it's really the oil companies. "That's the guy behind the curtain," said one energy lobbyist. He said BP might be the largest ethanol credit beneficiary by virtue of a heavy Midwest presence, and noted BP was among the first companies to support the ethanol mandate. "You know who gets more money than anyone else from the credit?" the official said. "Are you sitting down?"
A spokesman for the Renewable Fuels Association, an ethanol lobby group, said the environmental agenda is actually serving the oil industry's interests. "Environmental groups should be more concerned with what BP is doing to the Gulf than attacking American ethanol," said RFA spokesman Matt Hartwig. "There is but one outcome of the delay game environmental groups are playing with ethanol: more oil use. As we clearly see today, that comes at a terrible price."
Exact figures on how much BP has gotten in ethanol credits are unknown because the IRS has turned down the Environmental Working Group's Freedom Of Information Act requests. A BP press officer said that information was not immediately available. But some back-of-the-envelope math can be instructive.
On BP's website, the firm states: "As one of the largest blenders and marketers of biofuels in the nation, we blended over 1 billion gallons of ethanol with gasoline in 2008 alone." Extrapolating from Energy Information Administration data on 2009 refining capacity, BP is estimated to have produced about 11.5 billion gallons of gasoline. If the company blended up to the 10 percent limit under current law, about 1.15 billion gallons would have been blended, translating to a $518 million tax benefit.
In 2008, federally mandated ethanol production was 9 billion, and this year that figure rises to 12 billion. If BP's blending rises proportionally, that could put the company at about 1.3 billion gallons this year, for a tax benefit worth $585 million. Some of that might be passed on to consumers at the pump, as well as shared with ethanol producers under their contracts, said Nathanael Greene, director of renewable energy policy at the Natural Resources Defense Council. "But the simple math is indisputable: BP is getting the direct tax benefit," he said.
Based on 2009 EIA data, BP would have been the fourth-largest U.S. ethanol blender, after Valero Energy Corp., ConocoPhillips Co. and ExxonMobil Corp.
Ways and Means Rep. Earl Blumenauer, D-Ore., said the credit needs to be re-examined. "Is it actually promoting the environment's health? Is the subsidy making a difference, and for whom?" he asked. "Here we are anguishing over hard votes because of the tradeoff between the economy now and the long-term deficit. This needs to be part of the discussion, and I think it will be."
Blumenauer and Ways and Means Democrats like Rep. Lloyd Doggett of Texas, another critic, may have to battle the political winds. Endangered House Democrats throughout the Midwest, such as Rep. Earl Pomeroy of North Dakota, also on Ways and Means, are anxious to see it extended.
And there is no question ethanol enjoys powerful political backing in the Senate. "It supports hundreds of thousands of jobs in the United States. If the United States is to continue reducing its dependence on imported oil, and oil in general, ethanol is a critical part of the solution," said Senate Finance ranking member Chuck Grassley, whose home state of Iowa is the largest ethanol producer.
As for the oil industry, it is clearly in a bind given the short-term tax benefit contrasted with the long-term competitive threat posed by ethanol, sources on both sides of the debate said. An American Petroleum Institute spokesman said the group had no position on the ethanol credit.by Peter Cohn "