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To help pay
for the war, the Union Congress levied a $2.08/gallon tax on
alcohol as part of the Internal Revenue Act. Meant to apply
to beverage alcohol like whiskey, no exemptions were extended,
and the tax (which equated to about $35 in 2007) was also applied
to fuel ethanol. Kerosene, a petroleum product also known as
coal oil, was priced comparably to camphene before the tax
and had been heating up the competition in the lamp oil market.
However, the tax brought the ethanol industry to a screeching
halt, allowing kerosene to dominate the market almost overnight. |
