McCain Withdraws Proposal to Cease Ethanol Subsidies

WASHINGTON D.C. -- Makers of ethanol can breathe more easily -- at least for now -- following news that a proposal to stop subsidies intended to boost ethanol sales was not included in the U.S. Department of Agriculture's (USDA) recently released 2012 budget.

The provision, proposed by U.S. Sen. John McCain (R-Ariz.) was intended to cut federal spending. McCain's measure would have prevented the USDA from offering grants and loans for rural gas stations to install "blender pumps," reported Reuters.

McCain withdrew the amendment before the Senate could vote on its merits. McCain provided no reason for quashing the measure.

The U.S. House of Representatives has proposed a similar bill that would prevent the USDA from spending money on blender pumps. At this point, it is unknown if that version of the bill will affect the USDA's 2012 budget.

According to Reuters, funding for blender pumps is important for ethanol makers like Archer Daniels Midland, Green Plains Renewable Energy Inc. and Poet.

Ethanol manufacturers have expected to lose a tax credit worth $6 million annually at the end of this year and have hoped government subsidies would help to make up for the loss, Reuters reported. Most gasoline sold in the United States offers a 10 percent ethanol mix. However, only a small percentage of gas stations sell E85 fuel.