Editorial: Give ethanol a chance here

Wednesday, May 10, 2006 | 7:28 a.m.

At a time when the American ethanol industry is just beginning to wake up and show great potential, an Arizona congressman is proposing legislation that could return it to dormancy.

Rep. John Shadegg, R-Ariz., has introduced a bill that, for its title, could hold a place of honor in the Doublespeak Hall of Fame. His Ethanol Tax Relief Act does not, as one would first think, give a break to domestic producers of this renewable automotive fuel that could someday break Big Oil's stranglehold on our economy.

Instead, Shadegg's bill would give foreign ethanol producers a big break, one that could slow or even end our own fledgling industry. The bill would suspend the 54-cent-a-gallon import tax on foreign ethanol, meaning American producers would be at a competitive disadvantage.

Many foreign countries began their ethanol industries decades ago, so their capital costs have largely been recovered, enabling them to sell the fuel for less than American producers can sell it for now. Dropping the import tax would swamp the domestic market with cheaper foreign ethanol, an economic blow that could take the steam out of the now-surging American industry.

Shadegg's purpose in introducing the bill is to shave a few cents off galloping pump prices. Oil companies are in great demand of ethanol now as a gasoline additive to replace the chemical MTBE, which for environmental reasons replaced lead as an octane enhancer. But MTBE was found wanting, as it contaminates water supplies. With ethanol the only alternative, American producers are gaining in number and their production is increasing daily.

The bill, supported by President Bush, would allow American oil companies to buy cheaper ethanol from abroad, an act that would send domestic producers reeling. And if American production scales back to negligible amounts, the United States will become dependent upon foreign countries for both oil and ethanol - the reverse of what is good for the long term.

Shadegg is proposing just a temporary suspension of the ethanol import tax, but temporary, especially in the face of oil lobbyists, has a way of becoming permanent. We believe the import tax should not be touched until our own ethanol industry is fully developed and able to compete on a level playing field with foreign production.