Segment 3 Of 3     Previous Hearing Segment(2)

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this committee but in many others. It is a tax incentive that goes to the oil companies to encourage them to use ethanol. If ethanol were to become, as others have said, the only oxygenate available in the marketplace, would a tax incentive be necessary in a mandatory structure?

    It is already being phased down over the next several years. I think that is something that is certainty worthy of debate and discussion as we consider the future of this program.

    Chairman CALVERT. Dr. Jessel, would you like to comment about that?

    Dr. JESSEL. Yes. Mr. Vaughn is very quick to say that this is a tax incentive that accrues to us, but let me assure you that the ethanol suppliers would make sure that they get every piece of that. So if we don't go and get that subsidy which is allowed, then we end up paying a lot more for the ethanol. So it is a—you know, we are—this is a sharing of that pain.

    I think for your State, in particular, Mr. Calvert, since we do not use very much ethanol right now, the Highway Trust Fund money out of which the excise tax subsidy comes from still flows to the State of California in large quantities. If large quantities of ethanol were used, particularly in the State of California, which we are all predicting is going to happen, that is going to have a significant impact on the Highway Trust Fund money, which then flows to California.

    And I think that is something that everyone needs to keep in mind as one of the consequences of expanding ethanol use in California beyond what is really necessary.
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    Chairman CALVERT. Any other comments?

    Mrs. Biggert, would you like to ask any questions?

    Mrs. BIGGERT. Not right now, Mr. Chairman. Since I just arrived, I am sure that the ranking member has upheld Illinois' questions in this area.

    Chairman CALVERT. The Midwest has been adequately represented today.

    Mrs. BIGGERT. Good.

    Chairman CALVERT. Very well, by the way.

    Mrs. BIGGERT. Appreciate that.

    Chairman CALVERT. Well, I want to thank this panel's very interesting discussion today. Obviously, as a Californian, I am very interested in what happens here. We want to have the highest air quality that we can achieve at the best price for the consumers in California. And that is what is important to my State, and I am sure everyone would agree that that is important to anyone.

    So with that, we are adjourned.

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    [Whereupon, at 11:54 a.m., the subcommittee was adjourned.]

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