Tuesday, January 3, 2012

New Year's Greens and Black Eyed Peas Won't Help at the Pump

Happy New Year, North Carolinians! Did you eat your fill of greens and black eyed peas in the hope of a prosperous 2012? Well, I hope you added another helping to your plate, because we’re getting smacked across the face with higher gas taxes; both federal and state.

Starting January 1st, the state gas tax increased 3.9 cents, making the total excise a record high 38.9 cents a gallon. We are the fifth highest in the nation! Take a bow people. Let’s give a round of applause to our elected officials. And let’s not forget all the “little people” with their insatiable appetite for taxpayer funded programs. This couldn’t have been done without them too.

But that’s not all. The federal government has to get their 4 cents in as well. They are repealing an ethanol subsidy.

The federal government hasn't changed its 18.4-cent gas tax since 1993, but a decision in Washington this year has the effect of a tax hike.

Congress ended a 30-year-old subsidy that reduced taxes by 45 cents on each gallon of ethanol that refiners and wholesalers blend with gasoline. Most gas sold today is 10-percent ethanol, so that works out to 4.5 cents on a gallon of so-called "E10" gasoline.

"Yes, we'll see costs for station operators (and presumably, the public) go up 4.5 cents (at) midnight Dec. 31, and I suspect much of it will be passed along immediately," Tom Kloza, chief oil analyst for the New Jersey-based Oil Price Information Service, said by email. "That would also be true for (North Carolina) and other states that see higher tax levies on fuel."

Now ending a subsidy is considered a good thing, except for one caveat:

In the name of reducing greenhouse gas emissions and reducing America’s dependence on foreign oil, the 2007 Energy Independence and Security Act (EISA) mandates that we need to consume 36 billion gallons of ethanol by 2022. EISA also contains a mandate within the mandate for advanced biofuels, with the applicable volume of cellulosic ethanol set at 250 million gallons this year, 500 million gallons in 2012, and ultimately hitting 16 billion gallons in 2022

So, we are stuck with a ridiculous law. But no need to fear, Congress in their infinite wisdom lowered the tariffs on Brazilian ethanol, making their imports cheaper than American made ethanol products. All I have to say is thank god for Brazil. Where we would be without their oil and sugar cane fuel byproducts?

The Brazilians must eat a lot of greens and black eyed peas on New Year’s Day. How else could they explain the source of their good fortune?

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