A federal tax credit for ethanol expired on December 31, ending an era of strong federal government support for the product. While the tax breaks associated with ethanol had long seemed untouchable, Congress’ preoccupation with deficits and debt brought pressure to bear. Fiscal conservatives joined liberal environmentalists to kill it, with help from a diverse coalition of outside groups, says the New York Times.

Most domestic ethanol is produced from corn with nearly 40 percent of the domestic corn crop going to ethanol and byproducts. Other concerns focused on the higher prices that were caused by the government’s protection of ethanol. By artificially stimulating demand for the product in the gasoline industry, the price of corn and other related goods were increased as a result. Meat and poultry producers, big food companies and other suppliers faced higher input costs because of expensive corn and higher land costs. These higher costs are passed onto the consumer.

For text from The NY Times: http://www.nytimes.com/2012/01/02/business/energy-environment/after-three-decades-federal-tax-credit-for-ethanol-expires.html?_r=1&ref=todayspaper