When you give fuel blenders a tax credit, they keep part of the benefit and charge service stations less for blended fuels.
Extending the current ethanol tax credit and tariff would boost corn-based fuel production and corn prices, report University of Missouri economists.
The current tax credit for biofuel blenders and associated tariff on ethanol imports were studied by the MU Food and Agricultural Food and Policy Research Institute (FAPRI). Economists ran “what-if” scenarios on FAPRI computer models of the U.S. farm economy.
Both tax laws are due to expire Dec. 31, 2011.
With incentives in place, they saw fuel production from corn go up 1.2 billion gals./year.
Increased demand for corn as an ethanol fuel source would expand corn acreage by 1.7 million acres, says Seth Meyer, MU FAPRI economist and author of the study, released June 27.
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