More than 30 companies in 15 states produce ethanol. But the fastest growing segment consists of smaller, local and often farmer-owned enterprises. The oil companies want to nip this competitor in the bud. Their strategy is to end the tax incentives to ethanol. These are fair questions.
Ethanol does receive handsome tax incentives.
Yet this country has a longstanding policy of nurturing renewable energy industries in their early years, and ethanol is still a very small and fragile industry. In contrast, the oil industry is mature and dominant. Yet oil companies receive several times the tax incentives as ethanol firms. The oil depletion allowance alone, a particularly loathsome part of the tax code which allows companies to benefit the more they deplete a nonrenewable resource, is larger than all federal and state benefits to ethanol. Not surprisingly, Bill Archer, the powerful Texas Republican leading the charge against ethanol, refuses to cut a penny from the oil industry's incentives.