Clinton on the Spot

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Senator Schumer’s call yesterday for at least a temporary suspension of import duties on ethanol is one of those instances to savor – a sally by the senator in favor of markets. In an editorial Wednesday called “The Ethanol Windfall,” we noted that this protectionist tariff of 54 cents on a gallon of ethanol has served as a congressional mandate keeping gasoline prices even higher than they need to be, all for the benefit of the politically powerful domestic ethanol industry. Mr. Schumer joins the ranks of President Bush and an arch-conservative, Rep. John Shadegg, in calling for a suspension of the duties as a way to trim at least eight cents a gallon off gasoline prices. If the tariff is cut, prices will still be high but at least the government won’t be exacerbating the problem.

If politics makes strange bedfellows, no politics make stranger bedfellows than oil politics. Which may explain how, in respect of ethanol, Mr. Schumer has been savvier than even Republicans like Mr. Shadegg. The underlying problem is that in the 2005 energy bill, Congress required oil companies to use ethanol, instead of MTBE, as an additive in gasoline, even though ethanol supplies couldn’t keep up with demand for gas.

Mr. Schumer voted against that bill twice, citing, among other things, the ethanol mandate. As he put it at the time, “This provision adds an astonishing new anti-consumer, anti-free market requirement that every refiner in the country, regardless of where they are located, regardless of whether the State mandates it or not, and of whether the State chooses a different path to get to clean air, must use an ever-increasing volume of ethanol. It is nothing less than an ethanol gas tax levied on every driver.” Mr. Shadegg, in contrast, cast an “aye” vote at each of the two opportunities the House had.

Mr. Schumer is no great advocate of free trade overall, having championed a ruinous tariff of his own in retaliation for Chinese currency “manipulation.” Nor is he any defender of free markets concerning oil companies – he has also railed against so-called windfall profits and suggested breaking up big oil companies. But he is known for a certain lively rivalry with the junior senator for New York, whose presidential ambitions will have to pass through the domestic-ethanol-friendly Iowa caucuses. Now that Mr. Schumer has called a press conference to oppose the tariff on imported ethanol, Senator Clinton is on the spot. If she doesn’t side with Mr. Schumer and Mr. Shadegg on this one, New Yorkers can hold her at least partially responsible for the prices at the pump.


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