$600 Million for BP -- Courtesy of US Taxpayers
By Ken Cook, EWG President
2010 won’t be all lemons for BP. Sure, the company will be best remembered for blowout preventers, top kill and Tony Hayward, but along the way the oil giant stands to make a killing from its investment in the US ethanol industry and the special tax breaks that come with it. In fact, the company could pull in well over half a billion dollars in ’10 alone, courtesy of the US taxpayer.
Through the Volumetric Ethanol Excise Tax Credit or VEETC, a tax break that flows to refiners that blend ethanol into gasoline, including big oil companies such as BP.
“As one of the largest blenders and marketers of biofuels in the nation,” BP brags on its website, “we blended over 1 billion gallons of ethanol with gasoline in 2008 alone.”
In 2008 the VEETC was worth 51 cents per gallon, so that would have netted BP roughly $510 million. Currently the tax credit is 45 cents per gallon, but it is highly likely that BP is blending more ethanol now than they did in 2008.
Between 2005 and 2009, U.S. taxpayers forked over $17 billion through the tax credit to subsidize corn ethanol and got for their money a reduction in oil consumption equal to an unimpressive 1.1 mile-per-gallon increase in fleet-wide fuel economy. Here is EWG’s recent analysis of the VEETC boondoggle.
This meager degree of energy independence could have been accomplished for free by proper tire inflation, driving sensibly, obeying the speed limit and using the right grade of motor oil.
Of course, the ethanol industry and its Washington lobbyists never miss an opportunity to complain when environmentalists target them instead of big oil.
"It is unfortunate that groups purporting to represent the environment are still criticizing the only alternative fuel -- domestic ethanol -- that reduces our dependence on foreign oil," said Tom Buis, CEO of Growth Energy, in June.
Congress is currently debating an energy bill that would extend VEETC so that BP and others, including our friends in the ethanol industry, can continue to be propped up by taxpayer dollars.
Here’s the account in today’s (July 2) CongressDaily:
ETHANOL CREDITS HAVE A MAJOR BENEFICIARY IN BIG OIL FIRMS
By Peter Cohn
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."
To see responses from key congressional players and industry reps, read Cohn’s full piece.