Creating Long-Term Energy Alternatives for the Nation Act of 2007--Continued

Floor Speech

CREATING LONG-TERM ENERGY ALTERNATIVES FOR THE NATION ACT OF 2007--Continued -- (Senate - June 19, 2007)

The PRESIDING OFFICER. Under the previous order, the Senator from New Hampshire is recognized for 10 minutes.

Mr. GREGG. Mr. President, I rise to talk about an amendment I wish to offer--I will offer it later--relative to the tax package that was just introduced relative to this Energy bill.

Today, for those of us who live on the east coast, we would like to be able to buy ethanol at a reasonable price. In fact, we would like to be able to buy ethanol at all. The problem is, for ethanol to be shipped to the east coast, it has to go through pipelines. Transportation by truck or tank car is not viable, and thus ethanol, because of its components, cannot be shipped and is not stable in going through pipelines. So the east coast really does not have too many options for purchasing ethanol.

One option is to buy it from the Caribbean countries that produce it or from Brazil. Unfortunately, there is a tariff in place on Brazilian ethanol which amounts to 54 cents a gallon. That is a tariff which those of us on the east coast are subjected to and the effect of which is the price of ethanol is arbitrarily overstated.

This tariff was put in place quite a while ago and was put in during a period when the production of ethanol was not commercially viable because the cost of oil was still very low and when corn production was not oriented toward ethanol production. So this tariff was put in purely as a protective tariff for the purpose of allowing the corn industry in the Midwest to be successful in developing ethanol--at least that is the representation.

However, that position no longer has viability. The simple fact is that the corn industry in the Midwest is doing extraordinarily well because not only is it still a major feedstock for most of the traditional animal use to which it is applied, but it is also being used aggressively for the production of ethanol. In fact, we are looking at about 7 billion gallons of ethanol being produced this year.

Under this bill, for the purpose of gasoline replacement, it will be required that we have 36 billion gallons produced by the year 2022. So we are putting in place mandates which will absolutely require an expansion in the use of ethanol of dramatic proportions, which we should, and which will therefore raise the ship of the production of ethanol by the use of corn in the Midwest or sugar beets in the Northern Plains States as a form of producing ethanol. Therefore, they should not be concerned about the threat or the potential threat or the alleged threat of having ethanol come into this country from other producers in the Western Hemisphere, such as Brazil, because that is not going to affect their price and it is not going to affect their production capability.

Secondly, we still have in place in this bill and under the agricultural bills which we passed in the Senate a $3 billion annual subsidy for corn production--a $3 billion annual subsidy. The irony is we are subsidizing a product which is now extraordinarily productive and which has great viability--corn production--and, in fact, the cost of which has gone up so much that we are hearing complaints from many of the various farm communities, such as cattle producers who need corn, because the price has gone up so much as a result of the demand for corn. But at the same time, we are making it virtually impossible, because of the protective attitude of the Midwest on the issue of corn production for ethanol, to bring into the Northeast and into the Eastern States ethanol at a viable price and at a competitive price.

Our goal basically as an economy should be to get ourselves off oil, to move away from oil, and to move to ethanol production, which is the most efficient and cost competitive.

So the Northeast and the Eastern States should be allowed to purchase ethanol from Brazil without this arbitrary tariff that was put in place many years ago and continues.

In addition, if you just want to look at it on the basis of purchasing an overseas product--and some will argue this is just going to underwrite the foreign production of an energy source, ethanol, in Brazil--you can make that argument, but as a practical matter, if you make that argument, you have to ask yourself, would you rather buy ethanol from Brazil or oil from Venezuela because essentially the choice is just about that stark. You can buy your ethanol from Brazil or you can buy Venezuelan oil.

By making Brazilian ethanol more competitive and taking off this arbitrary 54-cents-a-gallon increase, which people from the East have to pay, you will actually make ethanol a more viable product in the East and thus reduce our reliance, for example, on Venezuelan oil or, for that matter, Middle Eastern oil. I personally would rather be buying ethanol from a country such as Brazil than buying oil from the Middle East or from Venezuela.

So the arguments for eliminating this tariff are myriad.

They are that we should be purchasing ethanol at the most competitive price, that the Northeast and the East cannot purchase Midwestern ethanol anyway at a competitive value because it cannot be shipped by pipeline because it is so combustible.

The original concept of protecting corn producers in the Midwest no longer has viability in light of the fact that we have mandated an ethanol usage in this country that is going to absorb just about every ounce of corn produced, and we see corn prices are already at extraordinarily high price and that has put a lot of pressure as a feedstock commodity on various other industries, such as cattle production; and that it makes no sense in light of the $3 billion subsidy which we already have in place for corn to require people in the Northeast--who are paying that subsidy, by the way, through their taxes--to also have to pay an inflated price for ethanol which is produced in Brazil. If we are going to choose to use overseas sources of energy, which we are going to have to on the east coast, at least for the foreseeable future, why wouldn't we choose ethanol produced in Brazil over oil produced in the Middle East or Venezuela?

In addition, there is another argument, which is that if the Midwest is so concerned about having this tariff in place, they seem to be cutting off their nose to spite their face because the practical matter is that the more ethanol that is used on the east coast where the population of this country is concentrated to a large degree, the more the east coast will become dependent on ethanol, and when we get over this hurdle of moving ethanol through pipelines or other ways of moving it from the Midwest to suppliers and producers, we will see there is a demand that has been created, and at that point we will have a competitive commodity, one presumes, with the Brazilian ethanol.

There is no logic to continuing this arbitrary tax on people from the Northeast and the East relative to the price on ethanol, a 54-cent-per-gallon tax. It should be repealed, and therefore I will be offering an amendment to repeal this tariff.

Mr. President, I yield the floor.

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