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Ethanol Tax Repeal Introduced in Senate

May 11, 2006

Senators John Kyl (R-AZ), John Sununu (R-N.H.), and Dianne Feinstein (D-CA) have introduced legislation to lift the 54-cent-per-gallon tax on ethanol imports, according to a CongressDaily report. The three Senators say their state's refiners presently cannot rely on ethanol being shipped quickly or cheaply enough from the Midwest. The lawmakers have the support of President Bush, who has said that he favors lifting the tax. A coalition of Midwestern lawmakers and ethanol producers argue that there is no need to lift the tariff because the supply of ethanol in the U.S. is not a factor in the cost of gasoline.Demand for ethanol, which is primarily derived from corn, has risen with the phase-out of MTBE, a petroleum-based fuel additive. Congress last summer required that ethanol use rise to 4 billion gallons this year and 7.5 billion gallons by 2012. The change has raised concerns about whether U.S. ethanol producers can keep pace.
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