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Washington currently provides approximately $5 billion worth of annual tax credits to U.S. farmers growing crops for ethanol production.
The question of ending the subsidies is fracturing the Republican leadership in Washington, National Public Radio reported.
Kentucky Republican Senator Minority Leader Mitch McConnell said, "This is a very controversial subject. We have members in our conference on both sides of this issue."
In a key vote Tuesday on Capitol Hill the Senate blocked a measure that would have immediately ended both federal subsidies and protective tariffs for corn-based ethanol fuel.
Leading the charge to end the subsidies is Oklahoma Republican Senator Tom Coburn, who has been trying for months to force colleagues to take a stand on ending the ethanol industry tax breaks.
Coburn infuriated some Republican Senate colleagues when last week he tried a Congressional maneuver to force the Senate to consider his legislation, which would end the $3 billion in tax credits still to be paid this year to those who by law are already required to blend ethanol with gasoline. Coburn insists that virtually all the revenue goes to big oil companies, telling reporters, "Here's something that is $3 billion that the people we're paying ... say they don't want ... and we're not going to take them up on it? What part of stupid are we?"
By. Charles Kennedy, Deputy Editor OilPrice.com
Charles is a writer for Oilprice.com