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Fourth of July Independence?

Agriculture.com Staff 07/03/2008 @ 5:57pm

With high-priced gasoline and diesel fuel, many Americans may feel more embattled than independent on the 232nd anniversary of our nation's birth this July Fourth. Some of our petroleum comes from violent hot spots around the globe. The Chinese make our shoes and bankroll our federal deficit. And a call to your computer's tech support could be answered in India.

To most consumers, it may not be obvious, but U.S ethanol is making our nation slightly more independent.

An Iowa State University study estimates that ethanol is saving consumers between 29 and 40 cents per gallon at the pump, compared to what they'd pay for fuel without ethanol. And, for the first time in 30 years, Americans imported less petroleum last year than the year before, said Ron Lamberty head of market development for the American Coalition for Ethanol in Sioux Falls, South Dakota.

But pressure is growing to make ethanol even cheaper by doing away with the 54-cents-per-gallon tariff on imported ethanol, which comes mainly from Brazil, either directly or through further processing in the Caribbean.

On July 2 (the real anniversary of the actual signing of the Declaration of Independence), Senator Richard Lugar wrote President George W. Bush, to suggest that the tariff be dropped.

"World trade in energy is rapidly increasing and many players are straying from market-oriented free trade and investment policies. There are striking examples in oil and natural gas, where increased political interference puts upward pressure on price and could eventually cause shortages in countries least able to cope. To demonstrate leadership, the United States should lift its tariff on Brazilian ethanol that now shelters the U.S. industry. G8 nations should encourage greater investment in research and large-scale commercial deployment of next generation biofuels made from non-feed stocks," Lugar wrote Bush.

Lugar, a long-time supporter of biofuels, is also a strong advocate of lowering trade barriers. The memo was part of a list of ideas on ways to deal with rising food and fuel costs that the Indiana Republican sent to Bush before he heads off to a meeting of eight leading industrial nations in Japan on Monday.

To Brazilians, who see themselves as another new-world democracy that should be a more friendly U.S. trading partner, this makes sense. Some members of Congress have already introduced legislation that would lower the tariff to 45 cents per gallon, to match the tax credit that ethanol blenders get. The recently-passed farm bill cut the tax credit from 51 to 45 cents, but extended the current 54-cent tariff two more years.

"We have recently started a campaign designed to educate Americans of an easy and fast way to help reduce high gas prices by eliminating the tariff on imported ethanol," Joel Velasco, a lobbyist for UNICA, Brazil's sugar cane and ethanol trade group, informed Agriculture Online. "While we are supportive of any measures that will result in lower gas prices for American drivers we view reducing the tariff to be just the first step to eliminating this artificial barrier. Lifting the tariff can have a real impact on the price American consumers pay at the pump."

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