US Senate Votes to End Ethanol Subsidies

The US Senate on Thursday voted to eliminate billions of dollars in federal ethanol subisidies, making it unlikely that the current 45-cent-per-gallon subsidy for refiners and 54-cent-per-gallon tariff on imported ethanol will be extended beyond the end of the year.

While the White House has vowed not to fully repeal ethanol subsidies, the 73-27 vote highlights growing concern over ethanol's effect on food prices. Last week, the World Bank called on governments across the globe to end ethanol subsidies. While it is unlikely that the loss of subsidies would cause a large or sudden decrease in ethanol output, the prospect of even a moderate decrease in demand caused Chicago corn prices to drop by 12 percent last week.

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