Subsidies for ethanol are being put to the test again in the Senate as budget cutters try to demonstrate a growing appetite in Congress to end special interest tax breaks to help reduce government borrowing.
The Senate is scheduled to vote today on two measures that would end subsidies for producing ethanol, a renewable, liquid fuel additive that comes mainly from corn in the U.S.
One measure would repeal a tax credit that provides 45 cents a gallon to oil refiners who mix ethanol with gasoline. The Senate rejected an identical measure Tuesday, 40-59. The other would eliminate federal funding for building ethanol blender pumps or storage facilities.
Critics say the subsidies are no longer needed. Supporters say ethanol helps reduce U.S. dependence on foreign oil.
Germany expected 3% growth or more
Germany's finance minister says the country's economy may grow by 3 percent or more this year.
The German economy, Europe's biggest, has kept up its strong recovery this year, posting quarter-on-quarter growth of 1.5 percent in the January-March period. It has been powered by strong exports and improving domestic demand.
Output grew by 3.6 percent last year and the official government forecast for 2011, which dates back to April, is for growth of 2.6 percent.
But Finance Minister Wolfgang Schaeuble said Thursday that German economic data are still improving.
He said of the 2011 economic forecast: “It won't be a big surprise if we were to achieve a three in front of the point this year.”
Oil stays down
Oil remained near a four-month low today as investors continue to worry about the European financial crisis.
Benchmark West Texas Intermediate crude rose 8 cents to $94.88 per barrel in midday trading on the New York Mercantile Exchange. In London Brent crude rose 79 cents to $113.80 per barrel on the ICE Futures exchange.
Oil dropped more than 4 percent Wednesday as Greece's financial troubles deepened. The fear is that a Greek default on its debt could seriously impact the economies of other European nations with debt problems, like Spain, Portugal and Ireland. Oil demand would drop if Europe's economy stalls. Europe consumes about 18 percent of the world's oil.
Analyst and trader Stephen Schork said that the U.S. economy would struggle to grow if oil climbs back above $115 per barrel and gasoline stays higher than $3.50 per gallon.
Gasoline pump prices dropped less than a penny to a national average of $3.685 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline has gotten cheaper since hitting three-year highs in early May. A gallon of regular is now about 26 cents less than it was a month ago, but it's still 98.5 cents higher than the same time last year.
Meanwhile, the International Energy Agency said Thursday that the world still has a cushion of surplus oil. It challenged assertions by investment bank Goldman Sachs that OPEC was producing about as much oil as possible. IEA said Saudi Arabia and other countries could crank up output by more than 4 million barrels per day. The Paris-based groups added that demand should rise this year to 89.3 million barrels per day, up 120,000 barrels per day from previous estimates.
Warning on cyber threats
A top Pentagon official has warned that cyber threats against governments and companies are growing and insists more cooperation is needed to defend against them.
U.S. Deputy Defense Secretary William J. Lynn III says the cyber threat is moving up “a ladder of escalation”: from network intrusions to service disruptions to possible attacks on infrastructure that could cause physical damage and “even loss of life.”
Lynn said Thursday that a terrorist group could disrupt or destroy computer systems — and noted that al-Qaida has expressed a desire to carry out a cyberattack. He spoke at a conference hosted by the Center for Strategic Decision Research and attended by military officials and corporate executives from 40 nations.
Aid available for Greece, but riots stir concern
Greece is likely to get enough money from the European Union and the International Monetary Fund to survive through the summer, but political turmoil in Athens and disagreement between eurozone governments fanned market alarm that the country could eventually default on its debts.
While Greek Prime Minister George Papandreou was preparing Thursday to reshuffle his government to get austerity measures through Parliament, a top EU official indicated that the country will likely get its next financial lifeline next month despite finance ministers' failure to agree on a new aid package.
That discussion has pitted rich countries like Germany and the Netherlands, which want private creditors to share a big part of the burden of helping Greece, against the European Central Bank, which warns that their demands could trigger a partial default, spark panic on financial markets and pummel banks in Greece and across Europe.
Olli Rehn, the EU's monetary affairs commissioner, said eurozone ministers would likely agree at their meeting on Sunday to give Greece the next (euro) 12 billion ($17 billion) it is due from last year's (euro) 110 billion package. However, the aid will only be paid out if Papandreou's government, which faces a vote of confidence within days, can get new budget cuts and privatizations through parliament before the end of the month.
The Associated Press