Effort continues to squeeze some good out of expiring ethanol tax break

Talk about it

With the 45-cent-per-gallon tax break on ethanol blender pumps set to expire at the end of the year, Dean Frederickson, manager of the Poet ethanol plant near Loomis, isn’t happy.

But he said ethanol in South Dakota will survive.

“Basically, what they are doing for us is raising taxes,” Frederickson said, “and I thought everyone didn’t want to raise taxes.”

Frederickson said when the tax credit expires, the cost will be put back on consumers.

“On gas, with 10 percent ethanol, you will pay 4.5 more cents per gallon of gas,” he said.

Because ethanol is still more economical then regular gasoline, he doesn’t see consumers going away from the product, even with an increase in price.

Sen. John Thune, R-S.D., said a deal is still in the works to end the ethanol tax credit immediately and distribute some of the captured savings to help with infrastructure in the ethanol industry. The thought is that if the credit is going away anyway, maybe some good could come out of ending it earlier.

“We were hoping to get the deal passed a while ago but couldn’t, because we need a piece of legislation to attach it to,” Thune said.

Thune said there is a possibility for the bill to be attached to an upcoming highway bill extension, but as the end of the year draws nearer, the amount of captured savings that would be put toward infrastructure will continue to dwindle.

“It is something we need to get done sooner rather then later, or else there isn’t going to be any savings,” Thune said.

“Once we find a vehicle for the deal, we will try to get it through right away.”

Frederickson said it is money for infrastructure that could really help the ethanol industry take off.

“We haven’t had 100 years like the oil industry has to build pipelines and create infrastructure, so that money would help us out a lot,” he said.

At one time, talks of an ethanol pipeline that started in Mitchell and went all the way to the east coast were in the works, but without funding those talks quickly stalled.

Frederickson said he does see ethanol pipelines in the future, but there are no projects in the works right now.

As for the future of ethanol in South Dakota, Frederickson sees it as bright, pointing to the relationship the Poet ethanol plant has with farmers and ranchers in the area.

“You can almost call us a feed plant that happens to make ethanol,” Frederickson said.

The Poet ethanol plant makes 160,000 tons of feed — known as distiller’s grain — per year as a byproduct of the ethanol-making process.

That distiller’s grain is a high-protein feed that is sold to ranchers in the area to feed cattle.

Frederickson said without the ethanol industry, the surplus of corn in this area would be huge and commodity prices would suffer.

Optimism is obvious when Frederickson speaks of the future. He notes the limited supply of oil that is available and how ethanol is a resource that can be renewed every year.

“Eventually we will run out of oil — when that happens, renewable fuels like us will be the only game in town.”

Tags: news, agriculture, ethanol, taxes, congress, energy, state