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Case
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Reference no. 212-002-1
Authors: Owen Hall Jr (Pepperdine University); Terry Young (Pepperdine University)
Published in: 2012
Length: 6 pages
Data source: Published sources

Abstract

The frenzy over ethanol both in the USA and worldwide continues to grow. Ethanol became a substitute for oxidizers used in automotive gasoline that were suspected to be carcinogenic. Furthermore, there had been a growing interest in using domestically produced ethanol as a replacement for imported oil. Ethanol has been highly subsidized by the Federal government despite growing budget deficits. The United States federal budget crisis that began in 2008 put federal subsidies of all kinds on the chopping-block. This situation placed the US Congress in a quandary in regards to the ethanol subsidies. On the one hand, there was increased pressure from the farm belt to maintain ethanol subsidies and import tariffs at their existing levels. On the other hand, the Congress was heavily lobbied by both the food industry and groups calling for a balanced federal budget to scale back on both. The $200 billion per year trade imbalance in 2011 also weighed on the minds of Congressional leaders. The government was giving approximately $5 billion annually to the ethanol industry at a time of unprecedented budget deficits. The primary objective of this teaching case is to introduce the student to the world of Ethanol and its impact on both the United States and international agricultural and energy markets.
Location:
Size:
Worldwide
Other setting(s):
Current

About

Abstract

The frenzy over ethanol both in the USA and worldwide continues to grow. Ethanol became a substitute for oxidizers used in automotive gasoline that were suspected to be carcinogenic. Furthermore, there had been a growing interest in using domestically produced ethanol as a replacement for imported oil. Ethanol has been highly subsidized by the Federal government despite growing budget deficits. The United States federal budget crisis that began in 2008 put federal subsidies of all kinds on the chopping-block. This situation placed the US Congress in a quandary in regards to the ethanol subsidies. On the one hand, there was increased pressure from the farm belt to maintain ethanol subsidies and import tariffs at their existing levels. On the other hand, the Congress was heavily lobbied by both the food industry and groups calling for a balanced federal budget to scale back on both. The $200 billion per year trade imbalance in 2011 also weighed on the minds of Congressional leaders. The government was giving approximately $5 billion annually to the ethanol industry at a time of unprecedented budget deficits. The primary objective of this teaching case is to introduce the student to the world of Ethanol and its impact on both the United States and international agricultural and energy markets.

Settings

Location:
Size:
Worldwide
Other setting(s):
Current

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