RFA Focuses on Ethanol's Benefits

July 17, 2002

Testifying at a House Transportation and Infrastructure Highways and Transit Subcommittee hearing, Renewable Fuels Association (RFA) president Bob Dinneen this week highlighted the ethanol industry's commitment to addressing concerns raised by highway and transportation groups regarding the increased use of renewable fuels like ethanol.

"While recent growth in ethanol use is great news for our industry, and while it demonstrates the effectiveness of federal efforts to promote the increased production and use of renewable fuels, it is not necessarily good news for the transportation sector, which understandably is seeking to maximize funding for roads and infrastructure," stated Dinneen. "However, sound energy and rural economic policy need not be mutually exclusive of sound transportation policy. As Congress works to reauthorize highway and transportation funding, or earlier if possible, we wholeheartedly encourage Congress to work towards addressing the issues surrounding the Highway Trust Fund and other transportation trust funds as they relate to ethanol."

Responding to the need for increased domestic energy resources, reduced air pollution and rural economic stimulus, the Congress has consistently supported tax incentives to encourage the increased production and use of fuel ethanol. Today, refiners and gasoline marketers using 10% ethanol blends pay 5.3 cents per gallon less than the excise tax paid on straight gasoline.

"As the Committee looks at this issue, however, it is important to consider that there are disparities throughout the motor fuel tax system," continued Dinneen. "This is really an issue that goes beyond the impact of ethanol on the Highway Trust Fund. Indeed, virtually every transportation fuel has its own rate of excise tax for payment to the Highway Trust Fund. For example, diesel fuel pays 24.4 cents per gallon; gasoline pays 18.4 cents; gasohol or ethanol-blended fuel pays 13.1 cents; propane pays 13.7 cents; methanol pays 9.25 cents; and liquefied natural gas pays 12 cents. Should a car operating on diesel fuel pay the same rate of tax as a car operating on gasoline when using the same roads? Historically, the Congress has used the tax code to promote various public policy objectives. Given the increasing need for infrastructure investment, perhaps other mechanisms need to be identified."